Can Somaliland’s Berbera Port anchor African trade security?

While Houthi attacks in the Red Sea pose a clear and present danger to the vital trade artery and the rising port congestion in the region throws another spanner in the works, Africa needs another trade hub. Could Somaliland's port city of Berbera be the answer?

Analysts and officials see it as a feasible alternative to current trading hubs in Africa such as Djibouti, and say the port city is a buffer against regional and global supply chain disruptions.

Recent investments from the UK and the UAE’s DP World are reflective of that view. With mounting security concerns and congestion forcing longer docking waiting time in other regional ports, the flow of investments to Berbera is rising. DP World, one of the top global port operators in the world, alone has invested more than $400 million in Berbera’s expansion since 2017.

The port is located near the Bab Al Mandeb strait, which connects the Red Sea to the Gulf of Aden and is a choke point for global shipping. Nearly 10 per cent of global trade, including a significant share of oil and container traffic between Europe and Asia, passes through this corridor.

The significance of this part of the region cannot be understated, as it accounts for up to 12 per cent of global oil transported by sea, according to data from the International Chamber of Shipping.

However, Berbera currently accounts for only about 0.06 per cent of global container traffic, so it has handling capacity to offer more to shipping lines, the engine of global trade.

Ethiopia’s new trade lifeline

With the rise in investments, Berbera has started to relieve some pressure in the strait. It has also given landlocked Ethiopia a second maritime gateway, reducing its dependence on Djibouti and providing the country with an alternative trade route to skirt disruptions in the Red Sea.

Last year, Somaliland signed an agreement to lease a 20km stretch of coastline to its neighbour, a move that caused a diplomatic row and prompted Somalia to summon the Ethiopian ambassador in protest. Mogadishu does not recognise the breakaway Somaliland, which seceded amid a civil war in 1991.

“The vision of the Somaliland government and DP World is to make Berbera a regional marine trade and industrial hub,” Supachai Wattanaveerachai, chief executive for DP World’s Horn