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Passengers wait to board a flight at
Bebera Airport. The port could become a $2.5bn logistics hub
The wreckage of fighter jets and
goats nibbling the grass alongside the newly laid tarmac at Somaliland’s small
Hargeisa airport hardly suggest the territory is about to become an
infrastructure hub for the region.
But authorities in the breakaway
costal nation in the Horn of Africa say the recently unveiled $10m
Kuwaiti-funded makeover of its two airports is just the beginning. They hope
the investment will kick-start its efforts to become the new gateway for
landlocked Ethiopia’s 92m people, developing connections by road, rail, air and
sea in a nation at the meeting point of the African and Arab worlds.
“We believe [developing our export
infrastructure] would contribute a lot to the region in terms of our strategic
location and help the region’s trade,” says foreign minister Mohamed Bihi Yonis
of the territory, which already exports millions of dollars of livestock across
the Gulf of Aden to Yemen and Saudi Arabia.
In recent months, bottlenecks at
ports in Mombasa, Dar es Salaam and Djibouti have highlighted the demand for
better infrastructure in a fast-growing region.
Ethiopia, a $43bn economy largely closed to the
outside world, is growing at 7 per cent a year and keen to develop coffee and
leather manufacturing exports. Ethiopia’s vulnerability was exposed after it
lost its main access to the sea when Eritrea won independence in 1994.
“Ethiopia is the only landlocked
country in Africa that has only one export port,” says Lars Christian Moller,
the World Bank’s lead economist in Addis Ababa, referring to the small
city-state of Djibouti, where Dubai’s DP World runs a huge port operation.
“Relying only on one trade corridor
makes the management of the political economy of logistics particularly
vulnerable to the relationship with the partner country Djibouti,” says a
recent World Bank report co-authored by Mr Moller. It counsels Ethiopia to
develop transport routes through Somaliland to “diversify Ethiopia’s options
and thus improve its negotiating power with transit corridors”.
It could also greatly assist
Somaliland’s efforts to secure international recognition. Hargeisa declared
independence from Somalia when civil war started 22 years ago, but has yet to
be recognised by neighbours reluctant to undermine Mogadishu,
only now emerging towards a fragile peace. The fact that Hargeisa is officially
seen as part of Somalia could yet complicate investors’ efforts to secure
insurance and financing.
The former British colony has no banks, no access to
international finance and survives on a budget that runs only to $125m a year
for its 4m mostly nomadic people. It derives much of its income from transport
taxes and remittances.
"We expect Somaliland to be a growing trade centre in east Africa and are positioning ourselves to meet and cater to the demand" said Esayas Woldemariam Hailu, Ethiopian Airlines
Still, Somaliland officials say they hope one day to
serve 30 per cent of Ethiopia’s exports, worth close to $1bn a year. They are
to meet counterparts in neighbouring Ethiopia for trade talks later this year.
“We would start tomorrow if we had the infrastructure ready,” says Suleiman
Diriye, director-general at the ministry of finance. Ethiopia’s trade ministry did
not return requests for comment.
Jason McCue, a British businessman appointed as an envoy
for Somaliland’s independence bid, is trying to assemble a consortium of
investors to develop the beachside town of Berbera as a $2.5bn logistics hub,
including an oil
pipeline when exploration for crude accelerates in Somaliland and
Ethiopia.
“The economic case for developing Somaliland is just
mind-blowing – Berbera port is key,” says Mr McCue, whose Berbera Development
Company is tasked by government to select a port developer and operator.
Ethiopian Airlines, among the three biggest airlines on
the subcontinent, is “very confident” that volumes of passengers and goods via
Somaliland will rise, and intends to start a joint venture to develop cargo
flights to serve goods transiting the port.
“We expect Somaliland to be a growing trade centre in
east Africa and are positioning ourselves to meet and cater to the demand,”
says deputy CEO Esayas Woldemariam Hailu, who attended the reopening of
Hargeisa airport last month.
At the airport reopening ceremony, a luxurious private
jet delivered Kuwaiti benefactors to the airport, littered as it is with
fighter jets. Yet, Hargeisa is long used to such contrasts: goats and Hummers,
camels and four by fours regularly share the hot dusty streets. But if proof
were needed of the scale of the territory’s ambitions, look no further than the
high-powered VIP lounge: Hargeisa’s small, revamped airport has two.
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Source: The Financial Times Limited 2013.
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