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The Horn of Africa States Business Opportunities and Potential

By Dr. Suleiman Walhad
November 23rd, 2022

 

The Horn of Africa currently remains four separate and disparate countries, that always need the helping hand of others. The region is known for its volatility, harsh weather (climate change), and presence of many foreign hands, both private and governments. It would appear that private hands in the form of mercenaries working under the guise of nongovernmental structures play more havoc than any of the other actors and factors. Nevertheless, the region, despite all the forces stacked against it, seems to be calming down. Peace seems over the horizon in Ethiopia, Somalia is handling the terror groups better and the Eritrean-Djibouti front seems to be calm, despite flares from time to time. And the resultant interaction and intermingling of the peoples of the region is improving. For decades Ethiopia and Somalia were as far from each other as any enemies could be despite sharing common people and borders. Eritrea was forcibly made to be part of Ethiopia, from which it extracted itself in 1993 and had terrible confrontations with it for many years. The relations between Ethiopia and Eritrea are now on an even keel. Relations between Eritrea and Djibouti was not good either as the two countries fought over small tracts of land, but the situation remains calm.

That violent picture that once marked does not represent the region anymore. Peace within each country and peace with the neighbors is improving and hence business among the countries of the region is growing. The port services of the region are serving the hinterlands of the region and products, mostly food items and other products of the hinterlands are becoming everyday items in the markets of the region. Trade is improving and companies in different countries of the region are working together, sometimes making alliances and/or corporations that have offices in at least two or three of the countries of the region.

The region represents an attractive and untapped potential for the intrepid investor. It enjoys a large agricultural base with Indigenous foods such as the teff and the coffee and the ensette, a huge mineral base including iron ore, manganese, magnesium, chrome and high value items like gold, diamonds, and silver and most of all oil and gas, a large blue economy in its huge nearly one million sq. km. maritime economic exploitation zone.

The region further owns a highly developed telecommunications system and an enhanced digital and innovation platform supported by the large diaspora of the region across the globe. The youthful Horn of African States citizen (probably over 70% of the population) is generally connected and is working to improve the situation of the region. This is assisted by the growing number of higher education and trade institutions in the region, and the stability that slowly seems to be creeping back into the region.

Governance is moving away from dictatorships; and democracy with its traditional hues and colors is being slowly installed in the region. The region suffered immensely from misguided international policies that emphasized not on developmental aspects but on matters that served international interests and not the Horn of Africa States region. Many of these policies were often put forward by NGOs-cum-mercenaries whose interest was to maintain corruption, extremism, and ethnic polarizations and hence their continuing presence. Governance is improving as governments of the region realize that it is their best interest to move forward and work together in stabilizing the region.

The region despite all its volatility, has installed businesses that span most of the Horn-East-South African littoral, where Horn African businesses and entrepreneurs thrive. One goes to Nairobi or Kampala or Dar Es Salam as far as Durban or Cape Town in South Africa and the DRC and others and one would encounter Horn African restaurants and transportation equipment, hotels, businesses and even fuel distribution networks. And this business acumen of the region has also attracted others to the region, where we see the DP World of the United Arab Emirates, Turkish businesses, and Indians and even the far-off Chinese from the Peoples’ Republic to Taiwan and Singapore showing up in the region.

The region’s presence close to the Suez Canal and its overlooking of Bab El Mandab, a narrow strait linking the Red Sea and the Gulf of Aden and henceforth the Indian Ocean makes the region important for both regional and world powers alike in terms of not only commerce and trade but also security. The region is also the source of the Blue Nile which provides most of the Nile waters that go to Northeast Africa (Sudan and Egypt) and hence further interest from multiple parties.

The region poses a population of some 157 million, one of the largest single blocks in Africa, and further supported to its links to a number of other blocks such as the COMESA, the Arab League and more especially the GCC, posting a combined population of over eight hundred million. The region qualifies for links with the European Union, the American markets and other important trade blocks. This would be good for any potential investor and more so in manufacturing, mining, tourism, agriculture, and energy, with presence of reasonably priced labor, mostly young and skilled, and presence of many of the raw materials needed for industrial production and manufacturing.

As we noted earlier, the region offers many advantages – access to the sea and oceans and hence the rest of the world and more particularly the Asian (both East, South, and West) and European markets, enjoys a favorable time zone (just three hours before Greenwich Meantime) to serve these markets and a large consumer market as well. Its large diaspora across the globe, presence in over 74% of the world’s countries, also provide it with access to these large markets as well as a say in the affairs of many a nation within the members of the United Nations Organization.

One should note that the region enjoys some of the fastest growing economies, a growing skilled and youthful population that can fit easily into the tech-oriented businesses of the future and an expanding educational system and related facilities. Despite the harsh times and effects of climate change, the region enjoys some of the happiest people on earth and hence healthier than many other regions of the world.

The most promising sectors of the region include among others the information and telecommunications sector, manufacturing, trade, education, healthcare, energy, and petroleum, and of course building and construction. Tourism is another major sector that can be profitable for any discerning investor and so are fishing, shipping, and ports industries. Real estate along the white beaches of its long 4.700 km coast and its many islands should be an opportunity, before the region’s prices pick up and soar.

Other consumer businesses which offer superior opportunities in the region include coffee shop businesses and restaurants. One must note that the region is the original home of coffee and produces some of the best coffee beans, solar energy panels and solar energy related products, fashion, and fashion products. In this respect, one must not forget that the region produces some of the best fashion models in the world. The region owns its jewellery industries, which date back to millennia and hence opportunities in this sector is also available. We can only conclude that there is a myriad of opportunities in the region waiting for the intrepid and savvy investors, both local and foreign.

 

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