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Unlocking prosperity: Ethiopia’s Red Sea access ignites economic boom

Ethiopia, a landlocked country in the Horn of Africa, has historically grappled with the challenge of accessing maritime trade routes. However, it has now achieved a remarkable feat, becoming the fastest landlocked nation to secure multiple port access points within a span of just 100 years.

Recent developments have opened up new avenues for Ethiopia to establish strategic access to the Red Sea, which in turn fuels an average economic growth of seven percent. This breakthrough unlocks a plethora of fresh opportunities for economic expansion, job creation, and infrastructure development. Consequently, the country has embarked on a transformative journey, strategically leveraging the Berbera Port in Somaliland as a gateway to the Red Sea.

Ethiopia’s access to the Red Sea has been significantly bolstered by the inauguration of the Ethiopia-Djibouti railway in 2016, seamlessly connecting the capital, Addis Ababa, to the bustling Djibouti port. This railway has swiftly emerged as a lifeline, providing Ethiopia with a direct route to international markets.

Nestled in a strategically advantageous location, the Djibouti port expedites the transportation of goods with enhanced speed and cost-effectiveness, thereby fueling the country’s trade potential. Meanwhile, the Berbera Port, situated in the breakaway region of Somaliland, has emerged as a vital player in Ethiopia’s endeavors to diversify its access to the Red Sea. This strategic partnership holds tremendous potential, fostering not only economic collaboration but also long-term regional stability.

The amplified and diversified access to the Red Sea has yielded a positive impact on employment in Ethiopia. With a low unemployment rate of four percent and a whopping estimated population of 115 million, the port diversification wave has unleashed a surge in employment opportunities. The transportation and logistics sector, in particular, has witnessed an upswing in demand for both skilled and unskilled labor, spanning an array of roles from port operations to logistics and port services.

Moreover, the ripple effect of heightened trade activities has spurred growth in interconnected industries such as manufacturing and agriculture, paving the way for job creation across various sectors of the economy. This robust labor market contributes to a more resilient and thriving workforce.

The investment in Berbera Port has not only bolstered employment but has also been a catalyst for significant infrastructure development. The improvements and expansions in transportation infrastructure, such as roads and railways connecting Ethiopia to Berbera, enhance the efficiency and cost-effectiveness of trade routes. This ensures the smooth handling of imports and exports, ultimately contributing to streamlined trade operations. These developments lay a solid foundation for a more interconnected and resilient regional economic landscape.

The new collaboration between Ethiopia and Somaliland serves as a shining example of the potential for regional cooperation in the Horn of Africa. It also accelerates the implementation of the African Continental Free Trade Area, which aims to facilitate the free flow of goods and services across the continent and enhance Africa’s trading position in the global market.

The strategic utilization of Berbera Port promotes economic interdependence, fostering an environment of stability and mutual benefit. This collaboration sets a positive precedent for other nations in the region to explore avenues of economic cooperation, such as foreign direct investment, leading to shared prosperity.

However, it is important to note that while the strategic access to the Red Sea through Berbera Port presents numerous opportunities, it also comes with challenges. Political complexities, infrastructure maintenance, and potential security concerns must be addressed. Sustained commitment to diplomatic engagement, investment, and regional cooperation will be crucial in overcoming these challenges and ensuring the long-term success of this strategic initiative.

Ethiopia’s strategic access to the Red Sea through Berbera Port in Somaliland marks a transformative development that not only enhances the country’s economic capabilities but also contributes to regional stability and collaboration. The employment opportunities generated and the ongoing infrastructure developments underscore the positive impact of this strategic partnership. Diversifying access to the Red Sea reduces dependency on a single access point and mitigates the impact of potential disruptions.

The expanded maritime connectivity facilitates the smooth flow of goods, fostering economic growth and attracting foreign investment to the region. Therefore, as Ethiopia continues to navigate the challenges and opportunities presented by this initiative, the long-term benefits for economic growth, employment, and regional stability are poised to leave a lasting imprint on the Horn of Africa.

(Dawit Teshale is a research assistant and M&E expert at the Ethiopian Economics Association.)

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