What Happened to Berbera Port?

Berbera Port, strategically located on the Gulf of Aden near the Bab el-Mandeb Strait, has a long history as a trading hub, dating back centuries. During the Cold War, it held significant military importance, serving as a naval base for the Soviet Union in the 1960s and later for the United States.

The modern transformation of Berbera Port began in May 2016 when DP World, a global port operator based in Dubai, signed a 30-year concession agreement with the government of Somaliland. This landmark deal involved an initial investment of $442 million to develop and operate the port as a regional trade and logistics hub. The project was designed in phases, aiming to significantly upgrade infrastructure and capacity. A key turning point occurred in March 2018 when Ethiopia became a 19% shareholder in the Berbera Port project, alongside DP World (51%) and Somaliland (30%), solidifying its role as a strategic partner and primary trade beneficiary.

The rationale behind this extensive development is multifaceted. For Somaliland, an unrecognised state, the port represents a cornerstone of its economic strategy, aiming to attract foreign investment, create jobs, and fund public services. For Ethiopia, the world's most populous landlocked nation, Berbera offers a crucial alternative to its heavy reliance on Djibouti for approximately 90% of its maritime trade, which incurs substantial annual costs. The Berbera Corridor, a 250-kilometer road linking the port to the Ethiopian border, is integral to this strategy, designed to reduce transit times and shipping costs for Ethiopian cargo.

The first phase of the new container terminal was officially inaugurated on July 24, 2021, featuring a 400-meter berth, a 17-meter deep draft, and three ship-to-shore gantry cranes, increasing the port's annual container capacity from 150,000 to 500,000 TEUs. Simultaneously, groundwork began for the Berbera Economic Zone, a free-trade area intended to attract manufacturing and logistics investments. In early 2022, British International Investment (BII) joined as a minority investor, further bolstering the modernization efforts.

Recent developments underscore the port's growing significance. On January 1, 2024, Ethiopia and Somaliland signed a controversial Memorandum of Understanding (MoU), reportedly granting Ethiopia a 50-year lease on 20 kilometers of Somaliland coastline for a naval base in exchange for potential Ethiopian recognition of Somaliland's independence. This MoU sparked strong condemnation from Somalia, which views Somaliland as part of its territory, leading to diplomatic tensions and regional mediation efforts, including the December 2024 Ankara Declaration where Ethiopia and Somalia agreed to pursue technical discussions while Ethiopia affirmed respect for Somalia's territorial integrity. Despite these complexities, an independent evaluation in January 2026 confirmed Berbera Port's readiness to serve as a viable maritime gateway for Ethiopia, highlighting its tripled container handling capacity and reduced vessel turnaround times from 64 hours in 2018 to 25 hours in 2024. As of August 2026, DP World continues with the second phase of expansion, aiming to extend the quay to 1,000 meters and increase capacity to 2 million TEUs annually. The Somaliland Coast Guard has also begun providing maritime escort services to reduce insurance costs for vessels, further enhancing the port's appeal and regional security. Berbera Port is increasingly seen as a strategic hub for the UAE's African push, linking the Gulf, the Horn of Africa, and the Ethiopian market.