Dubai-based global logistics company DP World, and Ethiopia’s Ministry of Transport have agreed to develop a road linking Ethiopia and Berbera, Somaliland, into a trade and logistics corridor.
DP World and its partners plan to invest up to $1 billion in supply chain infrastructure along the corridor over the next ten years. This will include dry ports, silos, warehouses, container yards, cool and cold chain depots, freight forwarding, and clearing activities, according to the company.
Ms. Dagmawit Moges, Ethiopia’s Minister of Transport, and Sultan Bin Sulayem, DP World’s Chairman and Chief Executive Officer, signed the agreement in Addis Ababa on the last day.
Mr. Bin Sulayem remarked that “we 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.”
The International Monetary Fund (IMF) stated that global trade is likely to increase after a recovery in the second half of last year due to pent-up demand for consumer durables from emerging economies.
The Washington-based lender estimates the trade to grow 8.4 percent this year and 6.5 percent next year after shrinking 8.5 percent in 2020.
The agreement between DP World and the Ethiopian government proposes that the two organizations form a joint venture logistics company to handle logistics operations from origin to destination. From Ethiopia to Berbera Port, DP World will provide export services. It will also provide import services from the loading port to shipment delivery.
According to the statement, Ethiopia’s transport ministry will review and address regulatory hurdles on the Ethiopian side of the Berbera Corridor to help logistics companies run smoothly.
Ms. Moges pointed out that “Ethiopia aims to diversify its port access facilities and services to improve its trade corridor access routes; utilizing the Berbera corridor will have a potential to make Ethiopia a front-runner in logistics operations, boosting the competitive advantage of delivering our products to the world market.”
Ethiopia will also implement state-of-the-art IT infrastructure and technology along with a corridor to ensure cargo security, according to DP World.
DP World has committed to invest up to $442 million in the development and expansion of Berbera Port, with the first phase nearly complete. The quay is being expanded to 1,000 meters, increasing capacity to 2 million TEUs (twenty-foot equivalent units), which will be handled by ten quay cranes.
The road connecting Berbera Port to Wajaale on Ethiopia’s border, which is being financed by the Abu Dhabi Fund for Development and the UK’s Department for International Development, will be completed by the end of 2021, according to the statement.