DP World has signed a Memorandum of Understanding (MoU) with Ethiopia’s Ministry of Transport to develop the Ethiopian side of the road linking Ethiopia to Berbera into one of the major trade and logistics corridors of the country’s international trade routes.
DP World and its partners are expected to invest up to US$ 1 billion over the next ten years in developing the supply chain infrastructure along the corridor. This will include dry ports, silos, warehouses, container yards, cool and cold chain depots, freight forwarding, and clearing activities.
The infrastructure investment will be in parallel with the implementation of the latest IT infrastructure and technology to ensure the efficient functioning of the corridor and smooth, secure, and transparent transfer of cargo throughout the entire transportation journey.
DP World has committed to investing up to US$442 million to develop and expand Berbera Port, with the first phase nearly completed. Further work is already underway on the expansion of the quay to 1000 meters, which will increase capacity to two million TEUs, operated by 10 key cranes.
The road infrastructure that will connect Berbera Port to Wajaale at the border with Ethiopia, funded by the Abu Dhabi Fund for Development and the UK’s Department for International Development, is expected to be completed by the end of 2021.
The road will link to the existing modern highway on the Ethiopian side and will further position Berbera as one of the key trade gateways in the region and will be one of the fastest and most efficient routes for Ethiopian transit cargo.
Distribution And Logistics Hub
Berbera Port is located at a strategic location situated on the northwest coastline of Somaliland. With a sheltered harbor towards the southern side of the Gulf of Aden, it is set to emerge as a trade and distribution hub in the East Africa region. Berbera Port plays an important commercial role by providing port services to landlocked countries like Ethiopia.
In addition, it remains strategic when it comes to commercial and oil shipping lanes. Such strategic location allows shipping and logistics majors to monitor the sea traffic of the Gulf of Aden, Red Sea, and the Horn of Africa; hence, Berbera port’s location has attracted the interest of major multinational port operators in the past few years such as Bolloré Logistics and more recently, UAE-based DP World.
Ethiopia has been looking at various alternatives to Djibouti in its quest to diversify its export routes. Ethiopia’s government is concerned by the strategic national security implications of being overly reliant on a single access point for trade and vital supplies. As such, Ethiopia has focused on securing access to ports in neighboring countries, particularly the port of Berbera in Somaliland. Unbeknownst to many, Ethiopia’s government had been lobbying in the UAE for years to invest in Berbera Port.
DP World runs 77 marine and inland terminals across six continents, including Dubai’s Jebel Ali port, the largest in the Middle East. As part of the $442 million deal, DP World won a 30-year concession. DP World’s investment would be developed in two phases with the overall aim of turning Berbera Port into a maritime hub for East Africa and a key outlet for Ethiopia.
The DP World’s investment in Berbera includes the construction of a 400-meter quay and a 250,000-meter square-yard extension of Berbera Port. DP World’s Chairman also announced the creation of a free zone offering tax advantages and investment incentives. Sultan Ahmed Bin Sulayem, DP World’s chairman and CEO, portrayed Berbera Port as a future magnet for shipping to eastern Africa that would spur regional economic growth.
DP World Investments In East Africa
Speaking at the signing, Dagmawit Moges, Ethiopia’s Minister of Transport, said: “As we kick off the journey towards prosperity, aiming at unlocking Ethiopia’s development potentials designed to propel the country into becoming an African beacon of prosperity, the transformation of the logistics industry is expected to play the leading catalytic role. Ethiopia aims to diversify its port access facilities and services to improve its trade corridor access routes; utilizing the Berbera corridor will surely have the potential to make Ethiopia a front-runner in logistics operations, boosting the competitive advantage of delivering our products to the world market. The development of this Corridor will not only meet the growing demand of Ethiopian’s international trade, but it would also enhance our nation’s capacity in utilizing our existing major corridor both in terms of volume of trade and efficiency.”
Sultan Ahmed Bin Sulayem, Group Chairman and CEO of DP World, said: “As a leading global provider of trade and logistics solutions, we strongly believe that developing the Berbera Corridor into one of the major trade and logistics corridors will unlock huge economic benefits for Ethiopia, and support its ambitious development plans. It will create new jobs, attract new businesses and investment along the corridor, as well as diversify and strengthen the country’s access to international trade by having a direct, seamless, and efficient link between Ethiopia and Berbera Port.
