A man walks past a portion of the Addis Ababa light railway under construction in Addis Ababa on January 15, 2014. The Addis Ababa Light Railway system contracted by the China Railway Group Limited will have a total of 41 stations. AFP PHOTO/Carl de Souza
A man walks past a portion of the Addis Ababa light railway under construction in Addis Ababa on January 15, 2014. The Addis Ababa Light Railway system contracted by the China Railway Group Limited will have a total of 41 stations. AFP PHOTO/Carl de Souza

For a long time, Ethiopia was known as a country that needed others. But the tables appear to have turned. Now other countries need Ethiopia.

By James Jeffrey

For the last 25 years, while the Horn of Africa (including Djibouti, Eritrea, Ethiopia, and Somalia) garnered a reputation as one of the most volatile regions in the world, Ethiopia has remained a relative oasis of stability. It is now one of the world’s fastest growing economies, an ascendancy that has also played a large part in Djibouti’s emergence as the dominant trade hub of east Africa, and has seen Somaliland peg its economic hopes for the future to Ethiopia’s.

“Ethiopia is the region’s locomotive,” says Ethiopia-born Dawit Gebre-Ab, director for Europe and North America with the Djibouti Ports and Free Zones Authority, which manages Djibouti’s increasing network of ports and logistic infrastructure. “With its expansion in manufacturing, Ethiopia could become the China of Africa. It possesses all the ingredients.”

Ethiopia has learned it cannot flourish in isolation and must interact with its neighbours – if for nothing else so that this landlocked country can reach the sea.  But the country has also proved savvy at realising what it has to offer that many further afield need (an affordable and relatively well educated labour force) and what it can provide its neighbours.

“It’s not that one depends on the other, rather it’s inter-complimentary,” Samir Aden, advisor to the minister for the Djibouti Ministry of Economy, Finance and Industry, says of Djibouti and Ethiopia’s relationship.

“We offer logistics and a secure commercial hub, while they offer what we need, such as water and electricity. Djibouti and Ethiopia are doing a great job together. There’s infrastructure integration between the two, lots of trade, and the governments are working towards a common agenda for developing, and a long-term vision.”

Increasing integration

“Demand from Ethiopia will get so big they’re going to need every port they can get,” says Ali Toubeh, a Djiboutian entrepreneur whose container company is based in Djibouti’s free trade zone. He indicates that a lot of Ethiopian trade will need to pass through Port Sudan and Kismayo in Somalia as well as Djibouti. Meanwhile, the development of rail links with the Kenyan port of Lamu illustrate Ethiopia’s increasing integration with the East African Community (EAC).

“Ethiopia’s projection of soft power, including trade relations with its neighbours, the development of cross-border economic infrastructure and sharing of services, is helping to bind these nations more closely together and demonstrate in tangible ways the benefits of integration,” says Matt Bryden, a Horn of Africa political analyst and executive chairman of Sahan Research, a Nairobi-based think tank.

In simple geographic terms, Ethiopia is well placed in the centre of the greater Horn of Africa and East Africa region, further allowing it to leverage its resources.

“It is becoming a major producer of hydroelectricity, and the strategy of integration includes the interconnection of neighbouring electricity networks,” says Robert Wiren, a French journalist who has covered the region extensively.  “Ethiopia is already exporting electricity to Djibouti, Kenya and Sudan, while the latter is exporting petrol to Ethiopia.”

Where the goodwill ends

But the apparent Ethiopian harmonising effect in the Horn vanishes around the border with Eritrea, where the situation harks back to days of the Cold War.

Eritrea gained independence from Ethiopia in 1993 following one of the longest-running civil wars in African history, close to 30 years. Many Ethiopians have never accepted what they view as the rupturing and desecration of the motherland, and the two countries clashed in a debilitating war between 1998 and 2000 – over disputed territory, primarily, but influenced also by various additional grievances – and have remained at loggerheads ever since. There was a clear reminder of this mid-June this year, with a spate of fighting breaking out along the shared border, including reports of heavy shelling.

In the northern Ethiopian cities of Mekele and Adigrat close to the border with Eritrea, residents lament the lost market opportunities – the roads are there, as are a shared language and culture, as well as family links either side of the border. But for now the main “movement of goods” comprises young Eritreans crossing the border to escape the authoritarian regime in Eritrea’s capital, Asmara.

“Eritrea will inevitably be drawn into closer economic union with the wider Horn of Africa region as well, but in the near term its unresolved dispute with Ethiopia and its commitment to economic self-reliance are likely to leave the country isolated, and economically dependent on more distant trading partners,” Bryden says.

Relations between Ethiopia and Somalia are not as bad, but they are not that cordial either. Somalia has long claimed Ethiopia’s Ogaden region as part of a Greater Somalia, culminating in a disastrous defeat for Somalia in the Ethio–Somali War between July 1977 and March 1978.

“Economic integration will eventually benefit Somalia as well, albeit in different ways,” Bryden says. “Somalia is more geographically remote from Ethiopia’s core markets than either Djibouti or Somaliland, so the transaction costs associated with transit trade are higher. But Somalia has other sectors, such as telecommunications and money transfer services that are highly competitive and could serve the wider region.”

The enemy of my enemy

“The Horn of Africa has made dramatic progress in the past two decades,” Bryden, says. “But there remain numerous challenges.”

The saying “The enemy of my enemy is my friend” has long been used as a guiding principle by Horn of Africa countries, according to Wiren. He adds: “In the past Ethiopia helped South Sudanese rebels because Khartoum was assisting the Eritrean Liberation Front. More recently Eritrea has supplied weapons to Somali Islamist groups fighting Ethiopian troops.”

There is also the issue of Somaliland, where “to refuse formal recognition … amounts to punishing those who have been peaceful – a very bad sign for the stability in the Horn,” Wiren says.

Ethiopia has its own internal challenges, with recent Oromo protests demonstrating how political frustration may lead to dangerous upheavals. “Ethiopia’s progress toward stability remains a balancing act between its commitment to the ideology of the ‘developmental state’, democratisation and human rights,” Bryden says.

Towards a regional bloc?

The current state of the Horn of Africa indicates that claiming it is free of its darker days would be foolhardy. But when viewing how Ethiopia, Djibouti and Somaliland are developing together, there appears reason for cautious optimism – perhaps even some celebration. It does not seem far-fetched to imagine the countries of the Horn eventually becoming a regional bloc akin to the EAC, now the most integrated trading bloc on the continent.

Regional trade blocs make sense for Africa. National economies of many African countries are small, not helped by diminutive population sizes and internal markets – Djibouti, Somaliland and Eritrea being prime examples. Regional groupings have more clout, and, some suggest, could one day be the basis of a continental free-trade area.

“This kind of integration between Ethiopia and Djibouti has been praised by the African Development Bank as an example for the rest of Africa,” Arden says.



  1. Of course, all the countries of the horn need each other. It makes economic sense to trade within themselves. Sadly, there are so many issues at play here.

    First, there will always be mutual mistrust especially between Ethiopia and the Somali speaking territories. The Ethiopians know too well what a United Somali people are capable of. It is this awareness that still fires their hostility towards Eritrea. They want to see themselves together yet are glad to see a divided Somali people.

    Second, the Ethiopians see themselves as the regional “superpower”. An Ethiopian pal once told me in Addis “no one can conquer Ethiopia”. The author’s use of the word “catalyst” seems appropriate, although in a negative sense. I doubt there is any altruistic goodwill on Ethiopia’s part other than to secure its own interests much like the colonial European powers did during the “scramble for Africa” years earlier.

    Third, there are so many delicate juggling acts to be done by each of these countries, it is impossible to pursue an idealist integration policy. Even the EAC bloc still has many challenges especially between the Kenyans and Tanzanians. The former fell they have had to make a lot of concessions in order to accomodate the latter. Matters reached a “deadlock” when Tanzanians denied Kenyan Tour operators access to their tourist sites. Nairobi retaliated swiftly. It took a lot of shuttle diplomacy to restore normalcy. How much are Somaliland, Djibouti, Ethiopia & Somalia willing to bend over to seek a compromise?

    Finally, I doubt Eritrea will be willing to join a regional trading bloc. The enemy of your enemy is still an enemy when they sleep with the enemy in the name of trade!


  2. Ethiopia is a prison of nations.
    Indeed, Ethiopia does not exist
    as Federal state. The Federal state that exists is the reflection system of Soviet Union. There are no private banks
    In Ethiopia. The current regime has no
    Legitimacy from the peoples of Ethiopia. Oromo are more than 40%
    Of Ethiopia demogrsphy. Those who rule Ethiopia are less than 3% of Ethiopians.The article of James Jeffery does not reflect the reality
    Of Ethiopia. Ethiopia polity is not sustainable let alone to be catslyst for
    the Horn of Africa.

  3. The Omars, the Yassins – for once can you cook up something positive than a stew of the chaos in your heads? Things change and evolve. We now see that the struggle is between the talkers and the doors, the visionaries and the helplessly pessimistic. You will have your attitudes for the rest of your lives. Hmmm. In a way, you have been conquered. If you carry so much spite, you sure are prisoners.

    • Lucien, welcome to our world. I suppose you meant the struggle between talkers and doers above (instead of doors. We’ll excuse your typo of course!).

      FYI, what we are talking about here are nothing but useful hometruths. The “no one can conquer Ethiopia” saying above came from a pal who was giving me a tour of Addis Alem while we were passing the statue of Menelik in town. Of course, as a visitor I silently smiled to myself. Remember, as a guest, African courtesy demands one to try to behave like a true gentleman. Indeed, I found it rather unrealistic. At the time, there were so many problems especially riots, human rights abuses, heavy censorship of the internet et al.

      I wondered what all this fuss was all about. There was very little in terms of “development” at the time. Cash was being carried in bulk, no ATMs, everything around me was so chilly/spicy (the food).

      It is good to be proud of your culture and history but at what cost? Change is inevitable. We all have our attitudes but I found some of yours asinine and uncomfortable, sometimes bordering on fantasy. This may explain why so many postmodernist Ethiopians prefer to stay in Europe and North America instead of back home despite it being the HQ of the Pan African movement, the AU.

  4. So-called Ethiopia is a Cancer in this region, it MUST be wiped off from the map!.
    Free all those helpless tribes from the prison called Ethiopia.

  5. lucien
    The image and realty are not the same
    As Yassin perfectly put key private
    Sectors are in the state hand. In the 21
    Century, there are no private banks in
    Addis Ababs. In Occuupied Somali
    region, there is no water for the people.Human rights and democracy are non existance. The only development , I have seen Somali region of “Ethiopia” folk dance freedom-danto. One cor factor that shows
    Ethiopia is not economic catalyst
    of the Horn of Africa is the gas project
    In so called Ogaden-Western Somalia.
    Ethiopia wants the gas to be refined in Djibouti. There are ports in Somalia which are few km away from the gas fields. This indicates that Ethiopia is exceclusively interested to export qat druga to Somali regions but not to cooperate other economic sectors.
    Ethiopia has no desire economic cooperation between Ethiopia and “Somaliland”.The gas fields in Western Somalia by far is near to Berbara than Djibouti. This is clear indication Wayne-the ruling elite of Ethiopia has no desire to has had economic projects with Somaliland.
    In brief, James jeffers’s article is myopic.

    • Samatar, very true. Ethiopia co-operates when it is in its own interests. The Lamu corridor, which is a joint Kenya-Ethiopia-S/Sudan initiative is meant to tap into the Juba oil fields.

      Like you correctly state above, everything in Ethiopia is state-owned. The banking sector is not as developed as in the rest of the region. The Ethiopian Commercial Bank has a monopoly. Compare with Kenya where there are over forty banks and countless ATMs. It is very difficult to transact except in bulk cash, which has its own risks. In Somaliland, you can buy/sell in both national (SLSH) and international ($) currency at the touch of a button. Even Kenya, with its advanced Mpesa mobile telephone platform is yet to reach such heights. There you can buy/sell in KES (local currency) but not in USD ($) due to Central Bank restrictions.

      Calling Ethiopia the “regions locomotive” simply because of construction of a railway is rather myopic. Kenya is constructing its Standard Gauge Railway at far greater costs, with sophisticated highways/overhead flyovers (that bypass National Parks and roads) and architectural designs (has a provision for use of electric power) than Ethiopia’s one.

      To our friend Lucien, what has made Ethiopia a laggard in terms of development (until these recent events) is its Soviet-style Communist market system. When everything belongs to the State, then there is little incentive for enterprise/entrepreneurship. Why bother to set up a business if it will eventually be taken over by the State? This kills effort and ingenuity.

      Tanzania with its “Ujamaa” (Communal) system under founding father Julius Nyerere went the same way at great cost to its people. The Kenyans used to refer to them as “a man eat-nothing society”. If everything belongs to the state, then there was nothing for the common man in the streets!