The Ethiopia-Somaliland port agreement in Berbera signifies a strategic and geopolitical shift, enhancing Ethiopia’s logistics and rebalancing regional power in the Horn of Africa. It fosters Ethiopia-Somaliland trade and could stimulate regional infrastructure growth.

Dear Readers,
The recent agreement between Ethiopian Prime Minister Abiy Ahmed and Somaliland President Muse Bihi Abdi, granting Ethiopia access to the Somaliland port of Berbera, marks a turning point in Ethiopia’s strategic logistics and supply chain dynamics. The agreement is more than just a logistical relief; it symbolises a significant geopolitical realignment in the Horn of Africa. Ethiopia’s landlocked status has long been a bottleneck to the country’s economic expansion, hindering trade effectiveness and regional influence. By securing a maritime connection to the Gulf of Aden, Ethiopia is not only improving its economic opportunities, but also forging a stronger political alliance with Somaliland, which could lead to a rebalancing of regional power structures.

The port of Berbera, a key hub connecting Africa to the busy Red Sea and Suez Canal sea lanes, will become a hub for the continent’s trade with Europe and beyond. Ethiopia’s economic growth to date, which has been due to a lack of direct access to the sea, will be transformed by this agreement as it paves the way for expanded trade opportunities and a more robust Ethiopian logistics network.

Looking ahead, cooperation between Ethiopia and Somaliland in the areas of logistics and supply chain management holds a whole spectrum of possible outcomes. One likely scenario is the blossoming of trade between the two nations, which will boost economic development in both countries. This increased interaction could not only boost the economies of both countries, but also serve as a cornerstone for regional stability and co-operation.

At the same time, this agreement could spark competition between neighbouring ports such as Djibouti, Mogadishu and Mombasa. Such competition could reduce logistics costs, which would benefit both the economy and consumers. In addition, this competition could incentivise infrastructural and logistical advances in the region, including the development of new transport routes and the expansion of existing ones. This infrastructural development would not only streamline the supply chain but also strengthen economic resilience in the Horn of Africa.

The pact between Ethiopia and Somaliland to utilise the port of Berbera is a multifaceted development with far-reaching implications. It heralds new trade and investment opportunities that could increase logistical efficiency and reliability in the region. However, this alliance also brings challenges, such as the need for significant investment in infrastructure and coping with increased regional competition. It is imperative that Ethiopia and Somaliland navigate these waters with smart diplomacy and strategic foresight to ensure that this partnership brings long-term benefits to their economies and people.

Yours sincerely

Thomas Hellmuth-Sand