President Ahmed Mohamed Mahamoud (left) and DP World Chairman and CEO Sultan Ahmed Bin Sulayem.
DP World and Somaliland have agreed to a framework in which the global terminal operator will invest $442 million into the port of Berbera under a joint venture, a move that would round out its regional network as part of a $1.2 billion global expansion effort.
The agreement is a part of a larger push by DP World to bolster its Africa and Middle East regional network, which includes the Doraleh terminal in neighboring Djibouti, its Jebel Ali flagship in Dubai and operations in Senegal, Egypt, Mozambique and Algeria. Over the last five years the company has added over 2 million twenty-foot-equivalent units in capacity at its African terminals and invested $1 billion.
“We’re going to make Berbera a gateway for the Horn of Africa,” Berbera port director Ali Mohamed said. “In a year, we will be able to process 200,000 containers — Berbera is as strategic as Djibouti.”
On the Gulf of Aden’s southern coast, Berbera sits at the entrance to the Red Sea and the route to the Suez Canal, the crossroads for cargo shipped between Asia, the Arabian Peninsula and Europe.
Berbera is primarily used to export sheep and camels to Arab Gulf nations and handles around 40,000 containers per year. DP World will deliver tugs, gantry cranes and high-tech container storage systems as well as other port equipment.
“These are the basics of any modern port, but saying that we will modernize the port, and equip it with all it takes to make it a hub, doesn’t mean that we have plans for other infrastructure,” a DP World spokesperson said.
Under the “term sheet” signed by the government of Somaliland and DP World, $442 million will be invested for the development of the port of Berbera and Horn of Africa trade. The term sheet signed by the government of Somaliland and DP World serves as a template to develop more detailed legal documents and the parties will draw up a formal contract once details are finalized.
“This agreement is to set up a joint venture company to invest in and manage the port of Berbera to enable it to achieve its potential for becoming a regional trade and logistics hub. The $442M project will be phased over time and is dependent on the volumes generated at the port,” the DP World spokesperson said.
The agreement helps to legitimize Somaliland in the international community as it has been an unrecognized country despite 25 years of de facto independence from Somalia. The agreement is the largest in the territory’s history and a vote of confidence in Somaliland’s ability to maintain peace and stability within its borders.
The port will be critical to landlocked countries in the region, and the agreement also calls for the establishment of a free trade zone, DP World said.
“I am very bullish about Africa and I believe it still has a very huge potential,” chief executive officer of DP World Sultan Ahmed Bin Sulayem said. “The Horn of Africa has been a trading partner of Dubai throughout history and this agreement builds on the traditional strong ties between the Somaliland community and the UAE — many dhows along the Dubai Creek still follow the routes of their ancestors to the ports of Somaliland and East Africa.”