Tag Archives: Somaliland

Slyly Conquering East Africa

The rulers of United Arab Emirates (UAE), one of whose components, Dubai, own a majority stake in DP World, one of the world’s largest maritime firms with perations in 40 countries.It is one of several Gulf states trying to gain a strategic foothold in east Africa through ports. Controlling these offers commercial and military advantages but risks exacerbating tensions in the region…

DP World thinks the region from Sudan to Somalia needs 10-12 ports. It has just half that. The firm’s first foray was on Djibouti’s coast. When DP World won its first concessions there in the 1990s, the Emiratis were among the few investors interested in the small and poor former French colony. DP World built and operated a new container terminal, Doraleh,and helped finance roads and other infrastructure. Doraleh is now the country’s largest employer and the government’s biggest source of revenue. It runs at nearly full capacity, handling 800,000 containers a year. Much of its cargo travels along a Chinese-built railway from Addis Ababa, Ethiopia’s capital.

Djibouti’s profile rose further after the terrorist attacks on America of September 11th, 2001, when America opened a military base there. France and China also have bases; other navies patrol off its coast to deter Somali pirates. But when the Emiratis wanted to open their own naval base they were rebuffed, partly because of their close ties to Djibouti’s rival, Eritrea (the two states had a bloody border dispute in 2008). In 2015 the UAE started building a naval base in Assab, in southern Eritrea. The base has been used in the Saudi-led war against Houthi rebels in Yemen….In 2016 DP World won a 30-year concession to operate the port of Berbera in Somaliland, which declared independence in 1991 (though no foreign government recognises it). Critics said the deal would hasten the break-up of Somalia.

The Horn ports all sit near the Bab al-Mandab strait, a vital choke-point at the mouth of the Red Sea: 4.8m barrels of oil passed through it every day in 2016. Competition is getting fierce, though. Qatar and its ally, Turkey, are building ports in Sudan. Saudi Arabia is in talks to set up a naval base in Djibouti. All three Gulf states are trying to snap up farmland in east Africa, part of a broader effort to secure food supplies for their arid countries. Emirati-built ports could one day export crops from Emirati-owned farms…

Gulf states could also find themselves in competition with China…In February 2018 Djibouti seized the Doraleh port, a concession to the UAE… Shippers believe it took Doraleh as a sop to China, to which it is heavily indebted. In July 2018, Djibouti opened the first phase of a new $3.5bn free-trade zone, set to be the largest in Africa when it is finished. Built mostly by state-owned Chinese firms, it sits next to Doraleh. DP World says the project violates the terms of its concession and is threatening to sue.

Excerpts from Red Sea Scamble: Ports on the Horn, Economist, July 21, 2018, at 33

Somalia as Security Flank for the Gulf

A battle for access to seaports is underway in one of the world’s unlikeliest places: Somalia, now caught in a regional struggle between Saudi Arabia and the United Arab Emirates on one side with Qatar backed by Turkey on the other.  At stake: not just the busy waters off the Somali coast but the future stability of the country itself.

In 2017, a company owned by the United Arab Emirates government signed a $336 million contract to expand the port of Bosaso, north of Mogadishu in the semi-autonomous Somali region of Puntland.   In 2016, another UAE-owned firm took control of Berbera port in the breakaway northern region of Somaliland and pledged up to $440 million to develop it. In March 2017, Ethiopia took a stake in the port for an undisclosed sum.  The federal government in Mogadishu has long been at odds with the semi-autonomous regions of Puntland and Somaliland. The money could destabilise the country further by deepening tensions between central government, aligned with Turkey and Qatar, and Puntland and Somaliland, which both receive money from the UAE.

At the same time, Turkey, an ally of Qatar, is ramping up a multi-billion dollar investment push in Somalia. A Turkish company has run the Mogadishu port since 2014, while other Turkish firms built roads, schools and hospitals.   The rivalries have intensified since June 2017, when the most powerful Arab states, led by Saudi Arabia and including the UAE, cut diplomatic ties with Qatar, accusing it of supporting Iran and Islamist militants…

Saudi Arabia and the UAE increasingly view the Somali coastline – and Djibouti and Eritrea to the north – as their “western security flank”, according to a senior western diplomat in the Horn of Africa region…

Excerpts from  Gulf States Scramble for Somalia, Reuters, May 2, 2018

Banks of the World: Dahabshiil

Dahabshiil outlet in Columbus, Ohio. Image from wikipedia

Dahabshiil…. is now trying to become something bigger: a bank….

Since most Somalis do not own passports (which are in any case far from secure as proofs of identity), Dahabshiil relies on the strength of the clan network. In a country where men can recite their ancestors’ names back fifteen generations, references are an effective way to prove that new customers are who they say they are. After that, their biometric information and fingerprints are stored in a Dahabshiil database, so that later transactions can be verified. Many financial transactions are filmed, in case records are needed later.

This system has fended off bureaucrats determined to believe the worst about the firm and about Somalia, says Mr Duale. But it has not completely warded off controversy. Barclays closed Dahabshiil’s London account in 2013 largely because of worries about its reputation. The British bank did not want to risk being associated with car bombs and warfare in Somalia. After an outcry, and a court case, the two firms reached a settlement—but Barclays did not reopen the account. Mr Duale is now coy about how the firm banks in the West, refusing to reveal the identity of his partners…Zakaria Hussein Ali, the local chief operations officer, explains in a broad London accent how Dahabshiil is like an 18th-century European family bank—relying on trust and careful management to get by. He says he hopes that by the end of the century, Dahabshiil will be as big as HSBC or Citigroup is now. Such grandiose ambitions show how far it has already come.

Banking in Africa: Transfer Window, Economist,  Oct. 17, at 78