1 August 2018

Ethiopia: Assab As an Alternative Port

Photo: Al-Jazeera
(File photo).

Following the agreement reached between the Ethiopian Prime Minister Dr. Abiy Ahmed and Eritrean President Isaias Afewerki, decision is made to resume telecommunication lines, transport services and trade relations between Ethiopia and Eritrea for the first time in 20 years. In line with this, preliminary preparation has also commenced by the two countries (to repair roads leading to the port and upgrading infrastructural facilities) in order to enable Ethiopia reuse the Port of Assab, and facilitates its sea-borne trades.

It is obvious that Ethiopia stopped buying port services from Eritrea at the end of the 1990s as a result of the conflict that broke out between the two. Since that time, the country has been relying on the ports of neighboring countries, especially on Djibouti to transit almost all of its bulky goods and services paying dearly.

Even the government of Eritrea has lost significant amount of revenue which could have been gained from the Port. The agreement made to reuse the Port, however, would have considerable social, economic and political boon for both countries.

It is undeniable fact that Ethiopians and Eritreans do have many things in common and a lot to share. They have the same history, language, cultural values and norms. The reuse of the Port, hence, apart from allowing them to expand economic opportunities across the border, it strengthens the two countries' people to people ties.

As it has been witnessed during the past decades, Ethiopia's economy has been growing fast. Various international economic outlooks have also projected nation's economy to grow steadily in the years to come. Due to this and following expansion of industrial parks, the volume of nation's import and export cargoes that are transited via Djibouti Port have augmented rapidly and so is in the future.

To manage this and facilitate efficient import-export trades, therefore, diversifying port access is sensible. In this regard, reusing the Assab Port would have economic potential to Ethiopia. At the same time, it significantly reduces expenses incurred by transport services through cutting time and distance, as it is much closer than other ports to Ethiopia.

As it is known, logistics cost and time is very important for a country's export performance. It gives a country competitive advantage. So in that sense, Assab Port will give huge competitive advantage to Ethiopia by considerably reducing logistics cost and time. This also will in turn enable the country to convert interests from foreign countries into actual investments.

Not only this. The Port being active also brings big economic benefits to Eritrea as well as Ethiopia, by helping accelerate the integration process within the region, and even with the Middle East due to the cheap transportation ports facilitate. Moreover, they will help fuel the economy of both countries and the region as a whole by facilitating movement of goods and to and from the region's hinterlands to the international market, and increase the region's international trade.

All in all, Assab will play an important role in making Ethiopia's export goods more competitive by reducing logistics time and cost, and for the socio-economic development of the region as more nations are moving for "port led development."

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