Somalilandsun – Ethiopia and Somaliland governments have agreed to exercise maximum efforts for the establishment of short and long-term transit cooperation mechanisms which will help to seek mutually agreed workable directions on modalities of Ethiopia’s maximum usage of Somaliland ports.
In a meeting held in Hargeisa on the 6th January 2014 between the Ethiopian Consulate General office in Somaliland and a Somaliland adhoc committee tasked to look into the matter with the Ethiopian mission in Hargeisa, the two sides have discussed in details on opportunities and challenges being raised by both sides pertaining to present and future usage of transit services.
Chaired by the Somaliland Minster of Foreign Affairs, the Somaliland adhoc committee comprises of the highest officials of the Somaliland ministries of finance, defense, aviation and planning. Of particular emphasis was any possibility of revising the current status of transit service deliveries to members of the Ethiopian private sector which has recently been put to a halt on accounts of the desire to do so by the Somaliland side until a lasting trade and transit agreement would be signed at some point. And this first meeting was held as a hearing session to take note of points presented by both sides.
During the discussion, Head of the Ethiopian Consulate General office in Somaliland, Brigadier General Berhe Tesfay, said that the establishment of the adhoc committee and the convening of its first meeting as an indication of the Somaliland administration’s determination of addressing any issues of mutual interest.
The Consul General who described security, trade and transit, infrastructure and capacity building as the four main pillar areas of cooperation also noted the Ethiopian Government’s awareness of the port potential being available in Somaliland. He expressed his optimism that the potential would provide Ethiopia the opportunity to have a closer port access to goods reaching to and/or originating from parts of Ethiopia with relative geographic proximity including those found in its eastern and south-eastern parts. This approximately accounts for up to 30% of Ethiopia’s total traffic of transit goods. And this phenomenon, he said, could be possible once the ports would be properly developed and improved in terms of capacity and quality including a more secured, affordable, competitive and seamlessly structured service delivery system. To this end, the two sides constructive engagement would be of paramount importance in garnering the necessary international support.
Ethiopia had been using the Berbera port to a certain degree until recently based on an agreement reached by both sides in previous times. Though no one could substantiate the volume by official figures, there are estimations that Ethiopia had certainly been spending hundreds of thousands of dollars in transit fees to Somaliland every year. Yet, the number of Ethiopian business people transiting goods through Somaliland had been showing an encouraging increment until recently, marking a very good trend of attracting more others to follow suit.
However, the Ethiopian Consul General said this trend seems to be facing minor challenges if left unaddressed might discourage existing and new Ethiopian customers from considering to use Somaliland ports. Some customers who preferred to continue using port Berbera are facing challenges to transit their goods. While few informed others have already started turning their face back to Djibouti. It seems that this begins to happen due to two main reasons. Few customers claimed that they were asked to pay an import tax in addition to transit fees as one reason. In fact if there are any who are engaged in destining their imports to the Somaliland market should pay double as transit fees and import taxes.
There has also been an expressed desire of the Somaliland side to temporarily suspend the service usage until a timely and comprehensive agreement which is under negotiation would be finalized at some point. In fact the Ethiopian side recognizes the legitimacy of the desire by the Somaliland side. Meanwhile, reaching a lasting and comprehensive agreement on the matter might be taking quite some time as it requires a more detailed and continuous negotiation that accommodates the mutual benefits of the two sides. Among required also include a synchronized development of transit corridors.
Construed from this perspective, General Berhe went on to suggest that revising the current decision will help to avoid any undesirable precedent which might harm broader future customer engagement. He said the two sides can embark on a temporary mechanism open to continuous improvements including in terms of harmonized pricing so as to ensure that the current transit service would be maintained while the comprehensive agreement under negotiation continues.
Somaliland’s Foreign Minister, Dr. Mohamed Bihi Yonis, on his part expressed his government’s happiness on the growing relations between the two sides in political, security, trade and other areas of cooperation. He said his office is ready to address any issues which will help to strengthen the excellent cooperation. He also shared the view that the two sides should exploit the potential of cooperation on transit and expressed his administration’s desire to work with Ethiopia in developing the corridors and expanding port facilities including capacity.
On trade, he said, every opportunity should be used to expand the cooperation in the area and make every effort to balance the volume of trade between the two sides. General Berhe shared this idea and expressed Ethiopia’s readiness to encourage Somaliland produced trade items to enter Ethiopian market with a minimum tax rate. He added that encouraging the expansion of transit services would also help to widen revenues of the Somaliland side.
Somaliland’s Minister of Defence, Mr. Ahmed Haji Ali Adam, Minister of Aviation, Mr. Mohamoud Hashi Abdi, Minister of National planning, Dr. Sa’ad Ali shire and Deputy Minister of Finance also made their respective remarks. Among the issues raised include the need to work hard to improve the trade balance. The committee also requested the Ethiopian side to meaningfully assist efforts aimed to expand transit corridors and port capabilities; and provide political support to Somaliland’s quest of international recognition. The meeting was concluded with plans to convene similar discussions in the shortest possible time.