Given its reliance on the Port of Djibouti for 95 percent of its foreign trade, Ethiopia is actively seeking alternative access to the sea to mitigate its economic and geopolitical vulnerabilities. Government officials have used rhetoric that frames this quest as an “existential issue” for the country, making it a dominant topic in their public speeches.
In this high-stakes endeavor, the Port of Berbera, nestled on the Gulf of Aden in the self-declared Republic of Somaliland, emerges as a beacon of immense potential. It represents a vision of diversified trade routes, reduced costs, and regional integration, a project where hundreds of millions of dollars have already been sunk into gleaming new cranes and freshly paved highways.
The economic case for Berbera is overwhelmingly compelling on paper. The numbers, as laid out by the UK development finance institution British International Investment (BII), tell a story of transformative impact. The report from BII, a major backer, forecasted that Berbera port is expected to enable trade equivalent to eight percent of Ethiopia’s Gross Domestic Product (GDP) and 32 percent of national trade by 2035.
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This will support 1.2 million jobs in the economy—where 60,000 of these employment opportunities will be created through the port expansion—and increase access to vital goods and staples for 10 million people in Ethiopia, according to the report.
When it comes to Somaliland, the overall expansion of the port is expected to improve the quality of life and livelihoods for over a million Somalilanders, increasing the availability and affordability of goods and indirectly supporting over 53,000 jobs locally, predicts BII.
With regard to Ethiopia’s current status on using the Berbera port, Abdinasir Ahmed, governor of the Central Bank of Somaliland said, “Ethiopia is indeed using the Port, but it’s not yet fully utilized,” indicating, “several options are on the table, including customs facilitation measures, logistic and trade financing arrangements, and potential joint investment initiatives for the future.”
“These measures will make the corridor more efficient, competitive, and attractive for Ethiopian traders,” he said.
Abdinasir and Mamo Mihretu, former governor of the National Bank of Ethiopia (NBE) held discussions on Berbera port and other issues in August 2025, just weeks before Mamo tendered his resignation.
Abdinasir indicated that crucial infrastructure works at the port have been completed.
“At the moment, the necessary infrastructure, including ships, are already installed and finalized; the port is operational, the economic free zones are finished, and the corridor connecting the port to the Ethiopian border at Togo Wajaale is also complete,” said the official.
“The primary item still under discussion is the trade facilitation and customs agreement, which is part of the broader port utilization agreement,” said Abdinasir. “We are working with the NBE to take the lead in implementing what we call the insurance and banking protocol, which is a crucial component of the overall agreement.”
While Abdinasir’s progress report is encouraging, government officials who spoke to The Reporter Magazine described a different reality. One revealed that plans to fully utilize the Port of Berbera have been put on hold, citing a refocusing of government priorities.
Speaking on condition of anonymity, the official stated that providing clarity on the matter is currently difficult.
“It’s difficult to provide an explanation on Berbera port for the time being,” he said, stressing the need to undertake activities more “silently.”
The government’s immediate focus, according to the official, has shifted to other areas.
“Our main focus is currently Assab,” he said, referring to the Eritrean port. “As a country of 120 million people, we must secure access to a port.”
When Eritrea closed the ports of Assab and Massawa during the 1998 border war with Ethiopia, access was lost overnight.
The official confirmed that the issue of Berbera is not currently on the government’s active agenda, noting that even parliamentarians querying about the issue have been told to hold off for the time being.
Despite the political stalemate, officials affirm the readiness of the port’s infrastructure and the strong partnership with Somaliland.
“Somaliland is our close partner and Berbera port is ready to be used at any time,” one told The Reporter Magazine.
In contrast to the statements made by Abdinasir, the official further explained that should plans to launch the port be revived, preparatory infrastructure work would proceed concurrently.
“When there’s a plan to launch Berbera port usage by Ethiopia, preparatory activities, such as those for transportation and roads, will go hand-in-hand. The port is alwaysready for Ethiopia,” he said.
Abdinasir also spoke about opportunities for Ethiopia to own a stake in Berbera port.
“We offered Ethiopia a 19 percent stake initially, but they haven’t invested it. I don’t think they have invested that stake,” he said, adding the offer for Ethiopia to acquire a stake in the port and other critical infrastructure is still up for discussion.
No matter how it pans out, Ethiopia’s overwhelming reliance on Djibouti remains a serious concern for the government. Incidents like a disruptive dispute over payment delays in 2013 have only brought the risks into sharper relief.
Academic studies also appear to back Ethiopia’s access to Berbera, framing it as a key component of ambitions for regional integration.
A study titled ‘Effects of Berbera Corridor on Trade and Security in the Horn of Africa: the Case of Somaliland and Ethiopia’ published by experts at the University of Hargeisa argues that Somaliland’s status as the only politically stable and a democratic state without international political recognition in the Horn of Africa makes the Berbera Corridor development a precursor to eventual transformation of regional economic and security status.
“The port expansion and construction of the corridor will boost economic and trade relations between Somaliland and Ethiopia as well as strengthen the security and stability of the region,” reads the paper.
Abdinasir’s statements align with this view.
“Our goal is to upscale Ethiopia’s utilization of Berbera while also mitigating the risks that might be inherent with Ethiopian trade with other regional bodies,” he said, though he refrained from elaborating on the risks he was referring to.
Through the management of United Arab Emirates global port operator, DP World, Berbera has been physically transformed. The Emirati firm invested up to USD 442 million to develop and expand Berbera port, with the first phase including the construction of a deep-draft, multipurpose port with state-of-the-art container terminals, gantry cranes for handling the world’s largest vessels, and a capacity of 500,000 twenty-foot equivalent units (TEU) annually.
For Ethiopian traders, that means faster turnaround times, reduced shipping costs, and smoother logistics. Critically, Ethiopia is not solely a potential customer; its purported 19 percent ownership stake in the port venture—with DP World holding 51 percent and Somaliland 30 percent—moves Addis Ababa from a mere user to vested shareholder, aligning its economic fortunes with the success of the entire enterprise, according to data from BII.
Four years ago, along with its partners, DP World envisaged investing up to USD one billion in developing supply chain infrastructure along the corridor.
Construction of the corridor connecting the port to Ethiopia is done and the only remaining task is finalizing the regulation and cooperation framework that must be signed between the Somaliland and Ethiopian governments,” said Abdinasir.
TesfachewTaffere (PhD), an economist, sees the strategic necessity for multiple ports as a key point in his argument. With 95 percent of its trade dependent on Djibouti, Ethiopia’s position is “strategically wrong,” according to the expert.
He illustrated this with the example of Zambia, a landlocked country, which faced an economic crisis when Zimbabwe closed its ports due to the apartheid political strife.
He identifies the political situation with Somalia as a primary challenge, given that Somaliland is not internationally recognized as an independent state separate from Somalia.
However, Tesfachew points to existing global models for such scenarios.
“There’re nations with modalities of agreement where a landlocked country operates a port in another nation,” he said. “It would be beneficial for Ethiopia to reach a similar agreement to administer and use the Port of Berbera, paying an annual fee for its services. This could significantly reduce the cost of imports and exports.”
The potential savings are substantial.
Ethiopia’s port traffic currently pumps up to USD two billion annually into Djibouti’s economy through tariffs and fees. Djibouti has come to rely heavily on this revenue, with port operations accounting for approximately 85 percent of its entire GDP.
For Ethiopia, the cost of using Djibouti port is a significant burden.
Data shows that port fees are estimated to consume around 30 percent of the country’s export earnings, which have recently shot up from USD four billion to over USD five billion.
“A contractual agreement to administer Berbera could slash Ethiopia’s import-export port fees by up to 75 to 80 percent,” Tesfachew stated.
He cautioned that such an arrangement would require initial investment.
“Initially, however, it will have a cost for Ethiopia to bear, such as installing the necessary equipment and building infrastructure,” he added.
Beyond Berbera, Tesfachew also suggested Eritrea’s Port of Assab as another potential option, albeit one complicated by politics.
“Ideally, if there were no political problems, the Eritrean government could offer a similar agreement with Ethiopia making an annual payment for usage. It would function like your own port, though physically in another nation’s territory,” he explained. “Eritrea could even agree to have Ethiopia build the port infrastructure in Assab.”
Assab’s distance from Asmara (approximately 500 kilometers) means that Masswa currently serves as Eritrea’s primary port.
Tesfachewfurther noted that Djibouti itself has almost graduated to middle-income status with a Gross National Income (GNI) per capita over USD 2,000, compared to Ethiopia’s USD 1,300, due to port revenues, and is unlikely to willingly forfeit this benefit.
“However, reliance on a single route remains a critical vulnerability for Ethiopia,” he stressed.
For Abdinasir, the obvious next step is “expediting engagement to complete the port utilization agreement.”
“My specific concern is the insurance and banking protocols; which was an agenda discussed with the former NBE Governor in August 2025,” he told The Reporter Magazine. “Though Mamo has resigned from his post, we hope to continue these discussions with the upcoming administration of the NBE. Once this agreement is completed, Ethiopia’s use of the port will significantly increase.”
