The Dubai-based container logistics company DP World is growing and generating strong profits. However recent developments have hit the company hard in the Horn of Africa.
A couple of weeks ago, Djibouti terminated a contract that permits DP World to operate the Doraleh container terminal on its east coast. The parliament in Somalia also passed a resolution characterizing as “null and void” a deal the company had with Somaliland a few days ago. The deal brought in Ethiopia as a shareholder in the Berbera port where DP World is planning to finance $440 million as part of its huge growth efforts.
As a result of the fallout from the Somaliland deal, the lawmakers in Mogadishu took the extra ordinary steps of banning all UAE companies from investing throughout Somalia.
A Research Associate for the Africa program at London’s Chatham House, Ahmed Soliman has said that the geopolitical backdrop couldn’t be more significant as this is a region where “a plethora of political actors are jostling for position.”
Soliman said he doubts whether Somalia, which doesn’t acknowledge the independence of Somaliland can influence developments in the separate state when it comes to the development of Berbera.
Soliman however believes that the Gulf crisis has raised the stakes in the region. He observed that Turkey has been heavily engaged in reconstruction and development in Somalia. He added that Erdogan wants to use Somalia as an entryway for the expansion of Turkish influence, both from the perspective of diplomacy and business.
To make matters little more confusing, some federal states within Somalia in demonstrating their own autonomy have independently signed deals that seem to defy Mogadishu’s pro-Turkish foreign policy stance.
Somalia’s north eastern state of Puntland for instance signed a deal with the UAE last year to develop its Bosaso port, despite the close relationship between Somalia and Turkey.
Geography is also a serious influence, said Soliman the Chatham House Associate, speaking to Arab News. He said that Djibouti had appeared as a strategic center next to the Mandeb Strait shipping lane, which is very important for Gulf energy flow to Europe and goods between Europe and Asia.
It has leveraged its location for lucrative basing deals for emerging and current world powers alike. The former colonial ruler France together with China, Saudi Arabia, Japan and the United States all has bases in Djibouti.
DP World is involved in logistics infrastructure and ports projects in Rwanda, Algeria, Mali, and Mozambique.