Ethiopia is going to divert 30% of its cargo to Berbera port of Somaliland, says Somaliland Ports Authority.

Saeed Hassan Abudulehi, the Director General of the Somaliland Ports Authority, has shared details of an imminent agreement between Ethiopia and Somaliland about port use. He said, “Ethiopia is our neighbor. We want to do business with them. We are currently preparing a port use agreement or transit agreement. Once we sign the agreement, we will handle 30% of Ethiopia’s cargo in the first year.”

It has been reported that the Somaliland authorities are planning to handle 30 percent of Ethiopia’s cargo at Berbera Port, which is managed by the DP World of the United Arab Emirates and Somaliland government. For this, an agreement regarding port usage and customs procedures should be signed between Ethiopia and Somaliland.

According to the The Somaliland Ports Authority, the agreement has reached its final stage and will be signed in the next 60 days. “The agreement is being finalized and we are discussing one or two remaining issues. It may be completed in the next 60 days and we will sign it after 60 days”, Somaliland Ports Authority Chief said.

At the start of this year, Ethiopia and Somaliland signed an MoU which is being opposed by Somalia. The MoU would grand access to Ethiopia to the sea through Somaliland. Ethiopia would build a naval base in Somaliland and use Somaliland port for its imports and exports. In return Ethiopia would recognize Somaliland as country and give certain part of revenue generated by an Ethiopian business entity.

Since day 1, Somalia has been opposing the MoU, calling it a violation of Somalia’s sovereignty and territorial integrity. Somaliland is not yet recognized as a country. It is internationally recognized as part of Somalia.

Interestingly when, in 2018, Berbera port construction began, Ethiopia along with DP World and Somaliland government was a shareholder. But it could not honor its commitment of financial contribution and lost shares in the port.

Ethiopia, a landlocked country, has been relying solely on Djibouti ports for its cargo. But since last year, the Ethiopian government has been making it clear that it would diversify its use of port.

Ethiopia is expected to start using Kenyan Lamu port this year. Senior Ethiopian delegations have visited Lamu port this year. Kenya is reportedly offering reduced tariffs to the Ethiopian government. Read more..

Djibouti’s economy is heavily reliant on port tariffs generated from Ethiopian cargo. Diversion of Ethiopian cargo to Somaliland and Kenyan ports is set to impact on Djibouti’s economy.