Key View
- As Ethiopia’s manufacturing sector and trade are set for continued growth, we expect the landlocked country to prioritise the development of Berbera port in Somaliland while continuing to rely on Djibouti as its central export corridor.
- Beyond bolstering investment in the port itself, which is already undergoing a USD442mn expansion financed by DP World, we expect this to imply increased investment into the land transport route connecting Addis Ababa and Berbera. The first 12km of the Berbera - Ethiopia highway were inaugurated in June 2020.
- In the short-term, Port Sudan’s greater distance to Addis Ababa, coupled with Ethiopia’s high debt-load and consequent difficulties for Ethiopia to expand its rail network towards Sudan, as well as Sudan’s persistent struggles to privatise the port, support our expectation that Ethiopia will prioritise Berbera port instead.
- While Kenya’s Mombasa port is the largest in the region, its considerable distance from Ethiopia’s manufacturing sites decreases its attractiveness. Our outlook for Lamu port, which is currently being developed in northern Kenya and is thus closer to Addis Ababa, remain negative.
