Ethiopia has signed a landmark agreement with Somaliland, a self-declared republic of Somalia, to gain access to the Red Sea in exchange for a stake in its national airline, Ethiopian Airlines.
The memorandum of understanding, announced on Monday by Prime Minister Abiy Ahmed’s office, will allow landlocked Ethiopia to use the port of Berbera, located on the Gulf of Aden, as a gateway for its overseas trade. The deal also involves the development of a trade corridor, a free zone, and an airport in Berbera.
According to the agreement, Ethiopia will recognize Somaliland as a sovereign state and offer it a share in Africa’s biggest airline, which operates flights to more than 120 destinations worldwide. The details of the stake and the investment will be finalized in a month, said Redwan Hussein, national security adviser to Abiy. He did not disclose the size of the stake Ethiopia will offer.
Somaliland President Muse Bihi Abdi hailed the agreement as a “historic” achievement that will boost the economic and political prospects of his country, which declared independence from Somalia in 1991 but has not been recognized by any other nation.
“This is a win-win situation for both sides. Ethiopia will get access to the sea and Somaliland will get a stake in a profitable and reputable airline. This will also enhance our recognition and sovereignty as a nation,” he said at the signing ceremony.
The agreement comes amid rising tensions in the Horn of Africa, where Ethiopia is embroiled in a civil war with the northern region of Tigray, and Somalia is facing a political crisis over delayed elections. Ethiopia and Somalia have long been rivals for influence and resources in the region, and have clashed over the status of Somaliland.
Ethiopia, which has a population of more than 110 million people and one of the fastest-growing economies in Africa, relies heavily on the port of Djibouti for its trade, which accounts for 95% of its cargo. The deal with Somaliland will reduce its dependence on Djibouti and diversify its options for maritime access.
The port of Berbera, which was recently upgraded by Dubai-based port operator DP World, has the potential to become a regional logistics hub, competing with other ports in the region such as Mogadishu and Mombasa. DP World, which holds a 51% stake in the port, welcomed the agreement and said it would increase the volume and efficiency of the port.
The agreement is also expected to benefit Somaliland, which has a population of about 4 million people and a largely pastoral economy. Somaliland hopes to attract more foreign investment and trade, as well as diplomatic recognition, by partnering with Ethiopia and DP World.
The deal is seen as a sign of Ethiopia’s growing regional clout and ambition, as well as its willingness to engage with non-state actors and break away from traditional alliances. Analysts say the agreement could also pave the way for more cooperation and stability in the Horn of Africa, which has been plagued by conflicts and humanitarian crises.
The agreement is a testament to the vision and leadership of Abiy, who won the Nobel Peace Prize in 2019 for his efforts to end the long-standing border dispute with Eritrea and promote peace and reconciliation in the region. Abiy has vowed to continue his reform agenda and pursue his vision of a prosperous and integrated Africa.
Source: Bloomberg
