Somalilandsun – Location has long been considered as strategic game changer be it in warfare or commerce. Singapore is a living proof, a country that was once regarded as third world country managed successfully to exploit its location to build one of the most advanced port network systems in the world. Singapore has mastered the art of port management so well to the point that it has successfully prevented big economies like India and China from mounting any competition on its core business model.
Like Singapore, the port of Berbera is strategically located in the area where almost 30% of Global trade crosses along its shores to various markets. Also located next to Somaliland is Ethiopia a country that has achieved a double digit economic growth of 10% per annum with even greater potential of further growth if a modern port system is established to meet this demand.
Briefly then, Ethiopia is a country that has a population of close to 100 million (Worldometers.info) and a GDP of $55 Billion (Africa Ranking, 2015) with no access to sea and currently depends on Djibouti for its main trade route to the outside market. If the current economic trend is anything to go by it is fair to assess that the economy of Ethiopia will reach at some point the $275 billion GDP mark set by Egypt (Africa Ranking, 2015), the third largest economy in Africa, as the two countries have somewhat similar population size and demographic patterns. However this ambitious long term economic target by Ethiopia will largely depends on two key factors and that is the completion of the Hydro Renaissance damn Project and the expansion of the Port of Berbera including the transport corridor that will connect the two countries. Upon the successful completion of these two projects Ethiopia and Somaliland will see a significant reduction in energy and transportation cost respectively.
The key question is how can Somaliland benefit from this investment and which of the two port management firm will turn Somaliland into an international maritime hub?
The answer to the first question comes in two folds: the political and economic significance of the deal. The signing of the bilateral agreement with the successful awarded company will showcase to the World that Somaliland has the capacity to enter into trade agreements with multinational corporations and countries irrespective of its current legal status. This in turn will solidify its legal case for political recognition worldwide in the coming years.
Furthermore the political status of Somaliland as a functioning multiparty democracy will act as an essential control mechanism that will force the incumbent Government to carry out extensive due diligence work and present its findings to both houses of parliament for consultation purposes before any deal is agreed. The advantage of having a transparent process of this nature is that it will allow Somaliland to value its national asset appropriately and therefore obtain value for money to the people of the Republic of Somaliland as they too have a vested interest on the deal.
The economic case as far as the port of Berbera is concerned is mind blowing one which requires long term economic policy that will turn Somaliland into a maritime hub. Its strategic location means the Middle East, Africa and Asian markets are all within reach opening up new commercial opportunities in the Horn of Africa.
The Port of Berbera can serve markets such as Ethiopia, South Sudan and possibly Uganda depending on the condition of the infrastructure and transport links currently in place. Again, all above is feasible if the drive is there for integrating regional economies and markets particularly the Sub Saharan market.
Additionally the Expansion of the port of Berbera will create new economic opportunities in other sectors such as logistics, maritime insurance, banking services and export and import of commodities worldwide.
Other economic benefits will include setting up oil refinery processing plant including Gas and oil pipelines to cater for South Sudan and Ethiopia energy markets. The port can also be used as a military post by the International community for the protection of maritime shipping lane in the Gulf of Aden. The new port will also transform the coastal town of Berbera into a tourism destination since Somaliland has 850 Kilometre of breath taking coastline of natural beauty in its pristine condition. The recreation of Berbera town as a tourist destination will attract holiday makers from further afield.
The second part of the question regarding what criteria to use in order to select the right company when issuing a tender of this magnitude will often be based on factors such as operating performance and whether the company has excellent track record of meeting financial objectives agreed beforehand. Somaliland Government should also design a maritime policy that will set a vision towards maritime dominance in the region and therefore any awarded company must work towards achieving that desired goal.
Having said that I believe the Dubai World Port (DWP) is in the pole position to obtain the tender and rightfully so due to its presence in the region. The above port management firm has the potential of linking the port of Berbera to the heart of the Gulf market where it has the main operating base. Nonetheless the announcement as to who gets the tender will be announced at the end of the year as many reports suggest.
However once the port of Berbera is fully transformed into the state of the art facility one will expect the port to compete with the likes of Djibouti, Mombasa and Dar-es-salaam and obtain the market share of the global sea trade which Somaliland is currently losing out substantially to other distance players due to lack of investment in the past.
When the investment is secured and the port of Berbera is expanded, the possibilities are endless one which will eventually re-ignite competition in the horn of Africa and help bring to an end 25 years of maritime monopoly enjoyed by Djibouti. The emerging of Somaliland as an international shipping hub will contribute tremendously to the economic growth of Africa and help landlocked countries reduce there transportation cost in the long run. It’s time for policy makers in Africa to seriously pay attention to the development of the port of Berbera as it has the potential of becoming the Singapore of Africa given its strategic location which gives access to three seas and three continent.
Written by: Omar Guled, London Based Analyst.
The writer takes keen interest on matters of Economics, International Development and Foreign Policy of the Republic of Somaliland. Other areas of interest includes Entrepreneurship, State building and the role of Institutions including matters surrounding the recognition of Somaliland.
The writer Omar Guleid can be reached on the following email address: email@example.com