Ethiopia reaches out to Djibouti and Kenya to partner on mega projects
“Our private sector will need to seize the opportunities of expanded market created through regional integration. Djibouti, Ethiopia, Kenya and Sudan will now work towards a true economic union with joint investments and ownership of projects because our people’s shared prosperity and security depends on it. Dr Abiy’s visit to these countries is a testament to Ethiopia’s enduring commitment to this vision,” said Mr Fitsun, who served as the director-general of the Ethiopian Investment Agency till last month when he was tapped to the prime minister’s office.
Launched six years ago, the Lapsset project was estimated to cost at $20 billion but was slowed down by the financial obligations as each country was to source financing, which meant further delays, with a $3.1 billion bill for the Lamu port alone.
It is understood that Addis Ababa could be seeking a shareholding of the port — currently 42 per cent complete — as it has recently done with the Djibouti port of Doraleh, in a bid to push for its interests.
Landlocked Ethiopia is seeking to diversify its main gateway points to the international markets through the sea, as it moves to cut reliance on the port of Djibouti and reduce congestion at the seaport, as well as slash costs.
Addis Ababa has long been held back by overreliance on the congested Djibouti port which handles more than 95 per cent of its trade goods. Ethiopia is now negotiating more port agreements with neighbouring countries to give the country the much needed port diversification.
For Djibouti, the development of the Lamu Port will also be a win for it, given that it is developing a $600 million new container terminal at the strategically located port of Doraleh, which connects the country to Asia, Africa, and Europe.
Djibouti, which has also pledged to open its Regional Livestock Quarantine Facility to Kenya that will help the latter access the international livestock market, means that it is angling to use its port to channel the Kenyan livestock, opening it up for further revenue income.
The region could also now see a possible re-alignment in the airline sector, with more collaborations and partnerships after Ethiopian Airlines was granted a second frequency flight to Mombasa, with both sides offering unrestricted marketing to Ethiopian Airlines and Kenya Airways in Kenya and Ethiopia respectively.
“We have opened discussions with other airlines on joint ventures as they seek to fuel their revenue optimisation plans starting this year. We have started discussions with South African Airways that could see us join forces on aircraft repairs and route joint ventures. So far, we have discussed issues of mutual concern. For instance, we fly to similar destinations in Africa, so there’s a possibility we could probably share those routes,” Kenya Airways chairman Michael Joseph said.
On energy, Ethiopia is expected to supply 400 MW of hydro-power to Kenya annually once it’s 6,450MW Grand Ethiopian Renaissance Dam), which is now 66 per cent complete comes to fruition. Kenya is also angling to use its expertise to help develop Djibouti’s geothermal capacity through a joint venture initiative.