See also:
» 27.09.2010 - US near de-facto recognition of Somaliland
» 05.11.2009 - Somalia's main export market reopened
» 17.06.2008 - Somaliland state economy rapidly expanding
» 06.02.2008 - More Somalis flock Djibouti
» 29.10.2007 - Somaliland introduces displaced support tax
» 03.01.2007 - Djibouti, Somaliland in bitter port feud
» 06.09.2006 - Somaliland secures large German industry investments
» 22.09.2004 - Saudi Arabia to lift Somali, Djiboutian livestock ban

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Economy - Development | Politics

Mismanagement of Somaliland port hinders development

afrol News, 24 June - Great opportunities were opened to the famed deepwater port of Berbera in non-recognised Somaliland as Ethiopia needed a new outlet in the 1990s. Somaliland's revenues and geopolitical importance were to increase. Mismanagement and alleged corruption however is leading to declining government revenues as shipping companies avoid Berbera in favour of ports in Djibouti, Somalia and Sudan.

A few years ago, the port of Berbera contributed with an estimated 60 percent to Somaliland's GDP and government revenues. According to non-confirmed figures, revenues from the non-recognised country's main port however have dropped by around 30 percent during the last two or three years. Berbera Port is definitively losing out in the regional competition over the lucrative foreign trade of Ethiopia.

According to several sources, the main reason for the decline of the Berbera Port has been years of mismanagement and a culture of corruption and extortion. Due to ineffective standards, unloading at Berber Port takes two to three times longer than in the competing ports of Bossaso (in Somalia's Puntland region), Djibouti and Port Sudan.

While time spent at Berbera Port is growing longer each time, the unwanted stay also gets expensive. Somaliland authorities in 2002 increased tariffs and taxes for vessels unloading and uploading in Berbera. At the same time, the modernised port of Djibouti lowered taxes and the Bossaso port tariff was almost dropped altogether. Berbera became reputed as a milking cow for the Somaliland government.

Even more annoying for shipping companies are however the non-legal payments demanded during the stay in Berbera. According to 'Somaliland Times', visiting vessels are forced to pay daily fees to port authorities for services not requested, including garbage collection and cleaning. Fees for jobs as unloading, tallying, piloting and anchorage are further collected double, by port authorities and by "a bogus firm," the newspaper found.

Also the World Bank in a recently published study found practices at Berbera Port to be little competitive. "The Berbera Port Authority collects import-export duties, board dues and other charges, and has a monopoly on loading / unloading services. However, the port continues to lack vital cargo handling equipment and storage facilities, and its loading time and cost compare unfavourably with those of privately managed ports," the Bank concluded.

For Ethiopian importers and exporters, the hassle does not stop in the port. According to the World Bank, municipal governments collect inappropriate tolls on the Berbera-Hargeisa road, which is the first passage towards Ethiopia. Compared with the somewhat longer distance between Addis Ababa and Djibouti, the Berbera - Addis Ababa road is in a poor state and has less capacity.

Consequently, Ethiopian businessmen and foreign shipping companies choose alternative routes. The Berbera Port is not gaining from the fact that Somaliland has the friendliest terms with Ethiopia compared with all other neighbours. Despite the unstable relations between Ethiopia and Djibouti, effectively and competitive prices at Djibouti Port have directed more and more regional trade to this facility, making it a regional hub.

The restructuring of Djibouti's port in fact has become a model investment. During the last five years, the port has been privatised and has attracted large investments to make it more effective and modern. Corruption has targetly been rooted out. The only factors hindering an even greater traffic to Djibouti Port is the transport bottleneck to Addis Ababa and the lack of political will in Ethiopia to get more dependent on trade through Djibouti.

A growing number of Somalilanders now urge the government of President Dahir Riyale Kahin to take equal steps to revitalise Berbera Port. Analyst Guled Ismail this week in an article in 'Awdal News' that the answer to the current crisis "is to privatise the port with a controlling majority shares left in the hands of Somalilander businessmen." A privatisation would also bring capital for investment and upgrading, Mr Guled holds.

A possible privatisation of the run-down port has in fact been discussed for years in the Somaliland press. The World Bank and the UN's development agency UNDP have several times recommended such a solution to increase efficiency in Berbera.

Observers however hold that such a solution is very difficult given the power balance in Somaliland. "Despite the highly touted democracy and rule of law in Somaliland, the reality is that the country is still governed on clan-basis and Berbera port is not an exception," a Somalilander journalist today told afrol News.

- The top management of the port comes from the natives of Berbera and the government has little say in the management of the port's revenue and how it is operated, he added. Attempts to privatise the port could provoke tensions between the traditional and economic elite in Berbera on one side and the central government on the other.

After all, the Director of the Port Authority is said to be one of Somaliland's richest and most powerful men, despite his modest salary, several sources hold. He also is said to have the backing of the local business community and clan leaders.

Meanwhile, Somaliland sees its regional importance diminishing from year to year, also making the government's efforts for international recognition of the breakaway republic more difficult. Somaliland lost a great opportunity to become a regional trading hub as Ethiopians were looking for new port facilities in the late 1990s, government critics hold.

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