Finance officials from the Horn of Africa gathered last week at the headquarters of the Commercial Bank of Ethiopia in Addis Ababa's financial district for the 23rd Horn of Africa Initiative (HoAI) Ministerial meeting.
Dignitaries from Ethiopia, Djibouti, Eritrea, Kenya, Somalia, Sudan and South Sudan took part in a ministerial panel that was closed to the media. They reviewed the Initiative's half-a-decade lifespan, and discussed plans for its future.
On the agenda were infrastructural and economic integration, cross-border trade, regional integrated logistics, and peace and security. However, the pressing issues of external debt stress and proposals for regional currency integration were glossed over.
Finance Minister and HoAI Chair Ahmed Shide told those that Ethiopia has been able to mobilize USD three billion and begin the implementation of more than 20 projects and programs since the Initiative was born five years ago.
- Advertisement -He highlighted HoAI has only managed to muster a little more than half of the USD 15 billion in commitments from development partners such as the World Bank, African Development Bank (AfDB), and the European Union.
"We need to do more," Ahmed said.
Data obtained from HoAI indicates that by October 2024, five development partners had approved 132 projects valued at close to USD 9.3 billion, while 33 additional projects valued at USD 2.1 billion are in the pipeline. A further 19 technical assistance, advisory services and analytics projects with a cost estimate of USD 44 million have been given a green light.
A greater portion of the funding commitments, close to USD 4.1 billion, has been earmarked for projects aimed at building resilience in sectors such as food security, climate change and skills for regional integration projects.
This is followed by nearly USD 2.1 billion for economic corridors projects under the Initiative's regional infrastructure networks development wing.
Ahmed remarked that Ethiopia's cross-border infrastructure and energy export frontiers have benefited from the Initiative, pointing to USD 136 million in financing from the World Bank and AfDB for the second phase of power transmission lines to Djibouti.
"This project will help us expand electricity exports to support our neighbor's energy to empower their industries," he said.
IIyas Moussa Dawaleh, Djibouti's minister of Economy and Finance, stated that the two countries have co-invested in projects valued at USD 10 billion over the past decade.
"Djibouti has the largest telecommunication infrastructure in all of Africa. We have the top fiber cables running in Djibouti. Some might say for what? It's because we are actually offering our partners all over the world to take part in the strategic infrastructure of our region," said Dawaleh.
"From Ethiopia all the way to Tanzania and Mozambique, they are all connected to Djibouti in telecommunications infrastructure. At the same time, we are benefiting from Ethiopia in a number of sectors, mainly in electricity. Unless we are interconnected to the electricity from Ethiopia, we will not be in a position to be as competitive as we wish to be".
He noted that Ethiopia's energy exports are helping Djibouti cut production costs while, in return, Ethiopia benefits from a reduction in transactional costs for connectivity.
Representatives from Sudan told the panel they would like to see the Initiative give more attention to their energy needs. They noted the correlation between conflict and resources, as Sudan nears the two-year mark in its ongoing civil war.
"If we can secure food, help generate income, and fight the adverse effects of climate change, then people will manage to stay in and will not find the reason to go out and fight. Part of conflict in any country is related to historical relations and economic integration, and interconnection can create more jobs for better services. In Sudan, only about 40 percent of the population has access to electricity; the cost of thermal generation is so high," said one representative.
Kenyan officials echoed Khartoum's concerns over increasing unemployment rates.
John Mbadi, cabinet secretary for the Kenya National Treasury and Economic Planning, characterized unemployment as the biggest challenge facing both the region and the continent.
"Kenya has a reserve of 3.4 million youth without jobs. As a region, every year we are introducing 800,000 new graduates trained individuals into the market. We should move with speed to take advantage of the opportunity that we have. All these initiatives that we take have a goal of improving the livelihoods of our people by creating job opportunities," he said.
Officials from Kenya and Somalia also urged for a focus on economic corridor projects linking their respective state with neighboring countries. Mbadi revealed that 10 of Kenya's 47 counties have benefited from HoAI projects.
"This initiative has served us a lot in mobilizing resources that we need to upgrade hundreds of kilometers of roads both in Kenya and thos connecting us with neighboring countries such as South Sudan, Ethiopia and Somalia," he said.
Mbadi cited the World Bank-financed USD 750 million gateway development projects linking Kenya's Isiolo and Mandera counties, as well as another USD 206 million project connecting Kenya with Ethiopia and Somalia.
Optimistic infrastructure development reports and calls for facilitated resource mobilizations aside, officials attending the 23rdHoAI ministerial panel expressed concerns over the entanglement of their developmental challenges, the lack of trade integration in the region and the impact of peace and stability.
The Chair observed that most of the region's development challenges are shared.
"Most of the development challenges we have in this region are very much intertwined. We cannot address them only through the development of our respective countries. We have shared history, geography and society and some of the development challenges are the impact of this collectivity. The collective challenges within the region require strong leadership," Ahmed said.
Despite prevalent and persisting political tensions and conflicts within and across member countries, he assured attendants the Initiative remains resilient and uninfluenced by the political turmoil in the region.
"This Initiative is very strong. It is not affected by political turbulence in the region. The ministers stayed focused on development, economy, and trade and cross-border logistics as well and that commitment supported by development partners is imperative and commendable," said the Minister.
However, analysts argue that the success of regional trade integration is affected by the countries' relationships. Some border crossings in the region have closed for years, while others are difficult to cross as a result of longstanding land and resource disputes.
Politically, tensions of varying magnitudes correlated with border issues still exist, particularly between Ethiopia and Eritrea, Ethiopia and Sudan, and Kenya and Somalia, posing obstacles for trade in the region.
Eritrea's tensions with Ethiopia deepened immensely over the past week, as its Ministry of Information issued a statement rejecting claims made by Mulatu Teshome, former Ethiopian president, accusing Eritrea of involvement in major conflicts in the Horn and of engaging in actions that could reignite war in northern Ethiopia.
On the other hand, Ethiopia and Sudan are still locked in a standoff over Al-Fashaga, a fertile borderland from which the latter has evicted thousands of Ethiopian farmers since December 2020. The matter has yet to see an official resolution.
Data from international organizations reveals that ongoing cross-border tensions along the Kenya-Somalia border, particularly in Kiunga Ward, Lamu County, have so far had severe negative impacts on local lives and livelihoods.
A report from ReliefWeb, a humanitarian news aggregator, discloses that infrastructure, particularly markets, trading networks, and essential service points, have been adversely affected, further isolating affected communities and slowing any effort of self recovery.
"The closure of the Ras Kamboni market, compounded by the shutdown of the Hurmood network, has halted cross-border trade, affecting access to essential goods and limiting income for local businesses. These disruptions have destabilized the local economy deepening food insecurity and increasing dependence on humanitarian aid," the update report reads.
Djibouti's Minister of Finance pointed out the extent of the gaps in regional trade integration.
"In supermarkets in Djibouti, seeing fruits from Kenya is much less likely than products from the UAR, even though we are only two hours away from Kenya. It is much easier to trade with China and Europe than with Ethiopia and other regional countries. How can one explain this? This has to change," said Dawaleh. "Our role in this regional integration as ministries of finance, including in pushing our neighbors to make sure that we are removing barriers, will be instrumental."
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Improving the efficiency of trade by connecting border agencies and reducing transport costs, increasing investments and improving the institutional climate for regional value chains, such as livestock and agribusiness and promoting ICT integration to facilitate trade by identifying areas for technical and financial assistance are among the top trading integration objectives of the HoAI.
A study titled 'Trade integration and facilitation reforms in the Horn of Africa and way forward' authored by Danilo Desiderio and Iradj Alikhani and published by the European Union in June 2021, notes that the non-tariff barriers in the Horn of Africa include import bans, government monopolies, cumbersome documentation requirements and restrictions resulting from prohibitions, conditions or specific market requirements that make the importation or exportation of products difficult and costly.
The paper argues that the misalignment and lack of coordination between national trade policies and regulatory frameworks is primarily caused by the overlapping participation of the initiative member nations in multiple regional economic communities, resulting in uneven
tariff treatments and the presence of different trade facilitation policies, strategies and roadmaps that are not aligned with each other.
However, last week's ministerial panel failed to adequately explore resolutions to the intricate issues described as fundamental by scholars.
Nonetheless, the impacts of peace and stability on regional integration were at least brought to the forefront.
"We really need resources to help us open the region. There is improvement in these coastal social-economic interactions among communities across borders, which are promoting peace and cooperation in a region that historically has been impacted by instability," said Mbadi. "Without peace and security you cannot realize any development. I want to emphasize that for all initiatives that we take, we must bear in mind that without peace and stability and security in the region, all will come to a halt."
