Djibouti handles roughly 95 percent of all inbound trade for landlocked Ethiopia, Africa’s second-most-populous nation and an economic power in East Africa.
Now Ethiopia is set to take a stake in the Port of Djibouti, its main gateway for trade, under a deal reached between the two countries, state media outlets said on Tuesday. The deal was reached during a state visit bt Premier Abiy Ahmed to Djibouti, his first trip outside of Ethiopia.
“A joint committee of ministers would meet to thrash out details,” Ethiopian New Agency said. The government had previously said that the port would remain “in the hands of our country” until it found new investors.
Even though the size of Addis Ababa’s stake was unclear, it is reported that Djibouti could in return get stake in key Ethiopia companies like Ethiopian Electric Power and Ethio Telecom.
Ethiopia lost its port after Eritrea successfully gained independence after years of a liberation war. Strained relations means they are unable to access the long port of Eritrea.
Djibouti on the other hand had been seeking investors for its port after terminating a Dubai’s state-owned DP World’s concession to run the port two months ago.
The port is a key asset for Djibouti, a tiny state along the Red Sea whose location is of strategic value to countries such as the United States, China, Japan and former colonial power France, all of whom have military bases there.