The recent inauguration of DP World’s Berbera Economic Zone in Somaliland is the latest piece of integrated maritime and industrial ecosystem
theloadstar.com
Recently, I inaugurated the Berbera Economic Zone (BEZ) in Somaliland, the newest member of DP World’s global portfolio of parks and economic zones. Close to DP World’s container terminal at Berbera Port, the BEZ is the latest piece in an ecosystem that will provide an integrated maritime, logistics and industrial hub in the Horn of Africa
But this was more than just another ribbon-cutting ceremony. The Berbera port and freezone together represent the potential to unlock economic and trade potential.
The Horn of Africa represents an important case study of the growth potential of Africa. Sitting at the crossroads of Africa, the Middle East and Asia makes it a crucial transit point for international trade through access to vital sea lanes – the Red Sea, Gulf of Aden and Indian Ocean.
The region’s socioeconomic environment, natural resources and vast agricultural lands have the potential to lift millions out of poverty. And with a growing population expected to reach over 300 million by 2050, the region could provide a significant market for goods and services.
Take Ethiopia. Already the largest coffee producer in Africa, the country’s economy is dynamic, growing at more than 9% a year for the past two decades, spurred by industrialisation and increasing foreign investment. Yet, the lack of infrastructure, including transportation, energy and communication networks, poses a significant challenge to further growth.
I have long spoken about the challenges of inadequate infrastructure that we must address to realise the region’s economic potential. These have been further exacerbated by the continent’s trade outlook. The economic growth of Africa is estimated to weaken to 3.8% in 2023, from 4.1% in 2022, due to a drop in investments and falling exports, according to the United Nations.
The African Continental Free Trade Area (AfCFTA) can unlock opportunities that can boost intra-African trade, boost economic growth and, in turn, an increase in trade activity. To realise these benefits, investments in infrastructure are critical – to establish robust transportation infrastructure, trade infrastructure, information and communication technology and energy infrastructure to boost operational efficiencies and, ultimately, drive exports and imports.
Enhancing infrastructure and logistics networks will also be vital to enabling the region and the continent to fulfil its trade potential. I understand the need to reconfigure supply chains to reduce risk and increase resilience. Poor road, rail and maritime infrastructure adds as much as 40% to the costs of goods traded among African countries. At the same time, intra-African trade makes up just 13% of its total. The continent clearly needs more investment in its supply chain infrastructure if this picture is to change.
The new economic zone and port at Berbera are precisely the kind of investments that can start unlocking the economic possibilities for the Horn of Africa. According to the Somaliland Ministry of Foreign Affairs and International Cooperation, the port, together with the development of BEZ, could create more than 12,000 direct employment opportunities and over 50,000 indirect jobs in the region. It will also facilitate trade equivalent to approximately 27% of Somaliland’s GDP and 75% of regional trade by 2035 in a region of more than 100 million people.
Beyond the Horn of Africa, we are committed to ensuring infrastructure allows the entire continent to flourish. In Rwanda, we are eliminating barriers along the supply chain, bolstering global trade flows and removing unnecessary bottlenecks. We have overcome Rwanda’s landlocked geography to help transform the nation into a valuable trade hub.