Ethiopia hopes Somaliland port terminal reduces dependence on Djibouti

A new container terminal opened at Berbera port in the semi-autonomous Somaliland region is expected to be a major trade gateway for landlocked Ethiopia.

It also is also expected to further enhance trade relations among East African and Gulf countries.

The government of Somaliland, along with the Dubai-based giant port operator, DP World, which is developing and expanding Berbera port, officially inaugurated the new terminal on Thursday.

Attending the inaugural ceremony were Ethiopian Finance Minister Ahmed Shide, Ethiopian Transport Minister Dagmawit Moges as well as the president of Ethiopia’s Somali region.

Expansion project

The terminal was inaugurated after the completion of phase one of the port’s expansion project.

Following the inaugural ceremony, Somaliland President Muse Bihi Abdi reportedly told the media that the newly built terminal will open up an economic opportunity in the East African region.

"With the new terminal, along with the second phase of expansion and economic zone along the Berbera corridor, we are now firmly positioned to further develop and grow our economy through increased trade, attracting foreign direct investment and creating jobs," President Abdi said.

"This port will serve the landlocked countries, mainly Ethiopia," he added.

Ethiopia depends on Djibouti for 95 per cent of its imports and exports.

More container capacity

According to Somaliland and DP World officials, Berbera’s newly built terminal will increases the port’s container capacity to 500,000 twenty-foot equivalent units (TEUs) annually from the current 150,000 TEUs.

With the completion of phase one, DP World is due to commence the second phase expansion of the Berbera port.

Completion of the second phase expansion is expected to boost the port’s accommodation capacity to two million TEUs annually.

The new shipping facility is said to enable Somaliland to play a key role in trade relations between the Horn of Africa countries and the Gulf region.

In addition to the expansion of new container terminal, Somaliland is building a Berbera free trade zone and corridor, and major road projects which intend to connect it mainly with Ethiopia.

According to Ethiopian officials, the road project due for completion later this year will not only serve as an alternative corridor for Ethiopia but it will also provide efficient service as it will allow imports from the port of Somaliland to enter Ethiopia “directly, quickly and efficiently”.

Last May, DP World, agreed with the Ethiopian Ministry of Transport to develop a road linking the port of Berbera to Ethiopia.

Ethiopian Transport Minister Dagmawit Moges then said that the corridor's development would meet his country's increasing demand for international trade.

Speaking to Nation.Africa, Ismail Shirwac, head of Cooperation and Development Partnerships at the Somaliland's Mission in Kenya, said the expansion of Berber port is part of Somaliland's effort to build a major regional trade hub.

"The recent advancement of Berbera port including construction of new container terminals transforms Berbera into a significant regional trade hub and increases the capacity of this Somaliland port to serve not only the people of Somaliland but the entire Horn of Africa" said Ismail.

"Our next door neighbour and closest friend, Ethiopia, which relied mostly on Djibouti, will benefit from such developments as it is a landlocked country.

"We believe there is need for more ports in the region to cement economic integration and create job opportunities," he added.

Somaliland, which lies on the southern coast of the Gulf, proclaimed itself as an independent state after the overthrow of Somali’s military dictator, Siad Barre, in 1991.

But it is yet to be recognised and is considered internationally as part of Somalia.

International recognition

Ismail further believes that the huge port investments could eventually bring Somaliland closer to its long awaited international recognition.

"It proves Somaliland’s capacity to enter into international agreements in line with the Montevideo Criteria of Statehood and triggers a global power attention to invest and engage with this significant part of Africa," he told Nation.Africa in a telephone interview from Nairobi.

DP World previously said that it has committed to invest as much as $440 million to develop and expand Berbera port on the southern coast of the Gulf of Aden.

According to Ismail, several companies have previously expressed interest to invest in Berbera port before DP World was awarded the tender for offering the best deal.

Such interests came for a reason, Ismail explains.

"First, it is because Somaliland is a strategic location in the region but also the political stability of the Republic of Somaliland is a major reason that has attracted international investment by the largest logistics and port terminal operation companies in the world."