Khat is not only a lifeline for farmers in the Horn of Africa, particularly in Ethiopia and Kenya, where the majority of growers harvest the stimulant leaf, but it is also a political tool frequently used to demonstrate one’s power. Ethiopia earns over USD 300 million yearly from Khat, or an average of USD 25 million per month, accounting for more than 10 percent of the country’s exports and ranking among the top five exportable items. In Kenya, the monthly export of khat, also known as Miraa, is estimated to be around USD 13 million.
Traders in Ethiopia, the stimulant’s largest exporter, had a comparative advantage over their Kenyan counterparts. It is due to Somalia’s decision to impose a two-year ban on Kenyan traders, which was lifted in June 2022 following the election of Somalia’s new president, Hassan Mohamud. The lifting of the ban marked the end of Ethiopia’s stronghold on the Horn’s khat market.
Traders anticipated that Ethiopia would overhaul its trade policies in order to both encourage khat exporters within the country and compete with Kenya, their direct rival. However, to the dismay of many exporters, the Ethiopian government suddenly announced that the minimum export price of khat would be raised to USD 10 a kilogram. This has given the impression that Ethiopian officials do not care about the issue, or that they have undermined Kenyan traders’ potential to dominate the khat market.
Officials only thought about the possible increase in foreign exchange inflow from the price hike, which they hoped would alleviate the country’s economic crisis in the wake of the North Ethiopian War, the drought in the south, and the rising inflationary pressure felt by ordinary citizens as a result of this year’s sharp increases in the cost of goods and services.
Importers of Khat in Somaliland and Somalia did not see the price hike positively, reaching out through their associations. The Somaliland Khat Association and their counterparts in Djibouti announced a ban on all khat imports from Ethiopia, a move that hurt farmers in Oromia. Most exporters of khat in Ethiopia are from the Somali region, and the same businesses are also registered as importers in Somaliland. So the fight was between traders in the two regions of Ethiopia.
The khat trade from Ethiopia to Somaliland is also unique in the sense that there is no classic buyer-seller transaction, according to Mustafe M. Abdi, a researcher at XCEPT.
“In other words, a Somali khat trader is both buyer and seller. There is also no formal trade contract between two trading parties through an official bilateral regulator. A large variety of khat types are exported informally as contraband at varying prices per bundle,” the researcher underscored.
He says that Somali khat exporters in the SRS and distributors in Somaliland interpreted the price rise as an internal political ploy orchestrated by the leadership of Oromia Regional State. “They suggest that the Region’s leadership is helping affiliated Oromo traders outcompete Somali exporters in the trade of khat from Oromia’s Hararghe zones and sold via the market-town of Awaday into Somaliland.”
Past headlines demonstrate the dangers of politicizing the khat trade. As ethnic tensions between Oromia and Somali regions grew during the presidency of now-incarcerated Somali Regional State president Abdi Illey, many people were killed. Over half a million ethnic Oromos were forced to leave Somali Region, and tens of thousands of ethnic Somalis were forced to leave Oromia Region as a result of a trade dispute that escalated into a deadly clash between the armed forces of the two regions.
Abdi, warns, “If the politicization of the khat trade escalates further, even a minor incident could reignite regional cross-border conflicts.”
It looks like the current government in Ethiopia does not want to involve politics in the khat trade. A prime example is the reversal of the decision to double khat prices, which was implemented following negotiations with authorities in Hargeisa on June 6, led by the former Ethiopian Transport and Logistics Minister, Dagmawit Moges, and the Prime Minister’s security advisor, Redwan Hussein.
“At the risk of being outcompeted by Kenyan producers and in the face of the Somaliland authorities’ strong backing of ethnic Somali traders across national boundaries, Ethiopia had to rethink its decision to increase prices,” Mustafe noted.
Given the explosive and destabilizing potential, and bearing in mind the past history of inter-ethnic animosity between Oromos and Somalis in the borderlands, it is important that a negotiated settlement is found on the matter of khat exports to Somaliland, according to Mustafe.
“Ideally, such a settlement should provide a fair share of revenues to both Oromo and Somali khat traders engaged in the export business to Somaliland. In that sense, there is also potential for trade to contribute to regional peace if the issue is given sufficient attention and ethnic tensions are de-escalated,” he concluded.
