The Horn of Africa States A Regional Economic Board

By  Dr. Suleiman walhad
January 22nd, 2023

The Horn of Africa States is in state of turmoil, a state of chaos and anarchy, partly due to the making of region itself and partly due to forces beyond the region’s control. Through my writings on the region, I have discussed and addressed many of the hazards the region faces and the opportunities it has.

We know the region owns substantial assets and many of its politicians were signing contracts with foreign parties with respect to these assets. We have pointed out the manoeuvrings of politicians as they come and go, sometimes signing away large parts of the territories (both land and maritime) and signing international contracts involving supposedly developmental activities, with very little understanding of the consequences.  I believe it is time the region discussed setting up a Regional Economic Board.  I present hereunder a blueprint of how I think the regional assets and resources should be handled and managed in the future. It is, perhaps, too early, but to present it, I must.

In the world of today, the economy is of utmost importance and this should be handled with great skill, care, and adeptness. The region, whether it likes or not, is a geostrategic location, where a large portion of the world’s trade passes through. It has also a very long coast and the adjoining maritime economic zone, which stretches some 643 km into the Indian Ocean. Although not really, proven, huge hydrocarbon reserves of about 600 billion barrels are reported to be in the region, both onshore and offshore. Other mineral resources are also mentioned including uranium, manganese, tin, iron ore, gold, diamonds, chrome, lithium, cobalt and copper and many others, including rare earths. The region also enjoys major riverine basins, including the Blue Nile basin, which could be a source of all the region’s agricultural  and energy needs, on its own.

The Horn of Africa States Peninsula owns one of the largest livestock populations in the world and supplies the Arabian Peninsula a major part of that region’s meat needs. There are many other assets, but one of the most important is a young and growing population, some 160 million of them, which if properly mobilized could be one of the most productive and entrepreneurial populations of the African continent.

To harness these assets for the good of the region, I propose the creation of a Horn of Africa states Economic Developmental Board (“HASEDB”). The HASEDB should be an institution empowered to manage the assets of the region, so they become income-generating resources of the region. The HASEDB would be managed through a board that is kept independent and at arm’s length from politicians who could do damage to the region without knowing that they have done so for minor political gains or for enriching themselves, just as they have done so far. We should avoid issues such as the so-called maritime dispute with Kenya, created by some of the irresponsible politicians of the region, ever coming back or the major power competitions over the region’s resources.

The members of the board should be of the highest technical and intellectual calibre and should include a number of foreign experts, hired for their expertise and managerial skills. To attract the best calibre, the pay of those experts must be commensurate with their responsibilities and achievements. Such pay compensation will reduce corruption and will attract the best talent.

The HASEDB will no doubt face a multitude of challenges including the region’s idiosyncratic politicians and their clan/tribe-mindedness. But the mission of the HASEDB, however should be to transform the Horn of Africa States Peninsula into a truly first-rate, world-class region.

To achieve this, the HASEDB will have to seize opportunities in agriculture, tourism, healthcare, fishing, hydrocarbon resources and other minerals. The billions of tons of iron ore and coal of the region could make it a major iron and steel producing region, the base of all industries, if the right minds were applied. It could also be a major hydrocarbon producer and exporter, which would move it from a beggar region to charity-giver and a donor region, just as the forefathers of the region were before the hydrocarbon industry took off in the Arabian Peninsula, when they used to pay Zakat to the Gulf Arabs.

The first stage of the HASEDB activities would be:

Listing all the assets of the region.

Identifying the best opportunities that the region has in terms of resources and prioritizing these resources for development.

Establishing general policy guidelines for the development of the resources of the region.

The second stage would be building up sectorial policies for these resources, which is in line with the general economic policy guidelines laid out by the HASEDB for the country, and the third stage would be implementing the resource development programs.

The HASEDB would be responsible for all matters related to licensing, which should be market oriented and based not only on the monetary value but also on the work program. The procedures, the discussions, the evaluations and decision-making should all be transparent. Health, safety, the environment and security should be of prime importance for the HASEDB when implementing any of its projects.

In this blueprint, we would propose sub-platforms as follows:

A sub-platform for Energy Production responsible for the development of a hydrocarbon industry, a wind energy industry, and a solar energy industry for the region. The Horn of Africa States Peninsula is reportedly rich in hydrocarbon reserves. This includes oil, gas, and coal. Wind energy is also an emerging source of power and energy, and the region is endowed with this resource, which needs to be developed. Solar energy would also have to be developed and maybe, the region can even think of developing ocean energy exploiting its Indian Ocean, Gulf of Aden and Red Sea coastlines.

An agricultural sub-platform for developing the region’s agriculture. Food would be an important sector in the world in the future, and Africa and particularly regions like the Horn of Africa States would be looked at as a source of food for the Middle East and surrounding regions.

A tourism sub-platform to develop the long white beaches of the region to receive European and North Hemispheric peoples who would, no doubt, visit the region.  The highlands and historical sites in the region, could also be marketed in better ways than today’s processes and procedures. This would require development of hotels and tourist resorts. A new and migrant or mobile population would thus be created, and this would be in the millions who would bring billions of dollars into the region’s economy every year.

A healthcare sub-platform to serve and cater not only for the citizenry but also for the large number of people who would either be residents of the region or visitors staying for short periods during their holidays or for seminars or speaking opportunities or conferences.

A telecommunications sub-platform that would assist the region’s technological development and digital economy, which would also be a guiding medium of education, healthcare, social and economic advances of any nation or region in the future.

A blue economy sub-platform – The region enjoys an exceptionally long coast, in fact, the longest in Africa (some 4,700 km) and since the manufacturing base of the world has moved to Asia, the region could be gateway for goods to enter Africa. This would require of the region to develop ports along its coasts and roads and railways and even sky routes to Africa from these seaports and airports. The exclusive maritime economic exploitation zone of the region is nearly a million square kilometer space, almost half the size of the land space of the region of nearly 2 million square kilometers. It extends 200 nautical miles from the baselines, from which the breadth of the region’s territorial waters is measured. According to law No.37 passed in 1972, its exclusive economic zone falls under the region’s sovereignty.

The region’s economy, even though small, in the first place, was devastated and ravaged by wars, corruption, mismanagement and the short sighted-ness of its politicians. It is carried in the news and other reports that the international community spends billions of United States Dollars in the region. We do not see anything that shows that such amounts spent in the region. It still looks poor, devastated and hungry all the time.

Turning this situation around would not be an easy task for anyone, as the mother issue of all the problems of the region, namely a political overhaul of the region’s governance systems, seems to be an elusive goal. The governance system of the region, based on the single state infrastructure remains a dark hole and the emergence of a new straightforward, transparent, patriotic, courageous and skilled leadership, has not yet emerged.

In the past the region’s economy was a command economy dominated by the state. Many of the features of the command economy inherited from the fake socialist regimes of the region in the past still remain, where the top leader sways most power in the individual state infrastructures. lately, the private sector has been pushing to take over the management of the economy and it is fair to say that a command economy would not come back to the region, knowing that the people of the Horn of Africa States are generally very private individualistic people at heart.

A stable environment is a prerequisite for the development of any successful economy and the Horn of Africa States citizen would have to grow away from the mindset that a group or groups could take over by force to rule the land. This is not possible anymore and the sooner the Horn African walks down from that higher pedestal to walk with the rest, the better it would be for all.

A favourable business environment would naturally follow this, as peace is established. A business environment would naturally lead to the establishment of rules and regulations that support the investor class and the entrepreneurial person through appropriate governance mechanisms.

In this regard, I propose that there should be clarity of vision and a dedication of the country’s leadership, be they political, traditional or businesspeople, or even academic. There should be long term planning and resistance to pressure groups and narrow interests, be they for clan purposes or interest groups. A lean and efficient governing systems would be ideal for running a successful governing regional system. A bloated clan-invested governance system as is the case today in each of the region’s governments, would continue to be a disaster for the region. Competence should be favored over nepotistic relations.

The HASEDB would have to follow the following major or key principles for a clear vision of development of the region and its resources:

1. Openness and transparency of all its sub-platforms and institutions, including measures for fighting corruption and mismanagement.
2. Encouraging the private sector to play a major part of the resource development.
3. Creating a close financial and economic relationship with the international community and maintaining governmental ethos of fiscal responsibility.
4. Implementing world-class standards and best practices, which reduce red tape and promote efficiencies. This would attract world-class investors and not adventurers who thrive on third world countries.
5. A social safety net for the country’s citizens. This would instill confidence and trust in the citizens and would create a sense of belonging for all.

The HASEDB will have to develop a diversified economy as noted above, which does not rely or depend on one industry.