DP World opens Somaliland hub as it seeks trade boost in Africa

Reuters/Tiksa Negeri

• UAE has emerged as a major investor in African infrastructure
• Berbera Economic Zone is Dubai port operator’s latest project in region
• Industrial, maritime and logistics hub is also backed by UK government

DP World has set up an economic zone in Somaliland as part of its plan to build a major trade hub in the Horn of Africa.

The Berbera Economic Zone was inaugurated on Friday by the Dubai-based port operator and the government of Somaliland, a self-declared republic in east Africa.

The project is also supported by British International Investment, the UK government’s development finance institution.

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It follows the opening in June 2021 of a container terminal at Berbera Port as DP World looks to take advantage of the city’s location along one of the busiest sea routes in the world.

The integrated maritime, logistics and industrial hub will serve the Horn of Africa, a region with a population of more than 140 million people. It is based on the model of DP World’s Jebel Ali Free Zone in Dubai. 

The opening of the Somaliland economic zone comes as the UAE emerges as a major investor in Africa. Over the past decade, it has become the fourth largest in the world, after China, Europe and the United States. 

Between January 2016 and July 2021, the UAE invested $1.2 billion in sub-Saharan Africa, 88 percent of the GCC total for that period.

The economic zone is designed to attract investment and create jobs for Somaliland, boosted by new legislation and fiscal and non-fiscal incentives.

DP World said it had already signed an agreement with IFFCO, a UAE-based food company, to develop a 300,000-sq-ft edible oil packing plant in the zone. A dozen more companies across various sectors have already registered.

Muse Bihi Abdi, the president of Somaliland, said Berbera would “be a key driver of economic growth, achieved through increased trade flows, foreign investment and job creation”.

Sultan Ahmed bin Sulayem, group chairman and CEO of DP World, said: “The dynamics of global trade are changing and there is a growing need for trade infrastructure, such as economic zones, with easy and fast access to international shipping.”

The economic zone’s masterplan covers more than 1,200 hectares and will be expanded to meet demand. Phase 1, now open, offers serviced land plots for the construction of company facilities, 10,000-sq-m of pre-built warehouses, build-to-suit facilities, open yard storage and office space.

The latest Africa Focus report, published by law firm White & Case in December, describes the GCC’s presence in infrastructure across the continent as “particularly notable”. It points to DP World’s nine ports and terminals in eight countries: Algeria, Angola, Egypt, Mozambique, Rwanda, Senegal, Somalia and South Africa. 

“Investment such as this continue to be a significant contributor to local employment and trade synergies,” the report said.

“As a multitude of African economies are in need of significant inbound investment, why can’t this be serviced by a Middle East region with significant capital to deploy… This could be a perfect partnership.”

Last month in Somaliland, the first bridge in the Berbera-Hargeisa corridor project opened – financed under an $89.9 million UAE grant programme. 

The road connects the port with the Somaliland capital Hargeisa, the Ethiopian capital Addis Ababa and other East African countries. 

In February, DP World’s CEO said more partnerships were required to break down barriers to private sector investment in Africa.

Speaking at the second Dakar African Infrastructure Financing Summit in Senegal, he said the cost of moving goods around Africa was five times higher than in the US.