Thursday, April 2, 2020

Lessons for Somalia: DP world in Yemen and what that means for Somalia

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In 2008 the Yemeni government signed a deal with DP world (The UAE based government owned port management company) in which the operation and control of Aden’s strategic port would be taken over by DP world. The agreement stipulated a 220 million dollar investment for the development of the port. It is also worthy of knowing that part of the agreement was to increase the container volume of the port from the existing volume of 500,000 containers annually to 900,000 containers annually.

The Yemeni government announced among jubilant citizens that the agreement and development of the port would bring an economic surge (sounds familiar?).

Four years later, the opposite of what was stipulated happened. In 2011, the container volume of the port fell from its original 500,000 per annum to a mere 130,000 which was followed by a surge to 212,000 in 2012 compared to the promised and agreed upon increase from 500,000 to 900,000.

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This was followed by an anti-corruption investigation that concluded that DP World did not honor the agreement in which it was a party to in 2008. This lead to DP World returning Aden’s port to the Yemeni government after weeks of strenuous negotiations which ended up with the Yemeni government having to pay 35 million dollars to DP World for basically destroying its port.

Brian O’Neill, a Yemen analyst and former editor of the Yemen Observer newspaper, declared “the contract with DP World had failed to deliver the needed “fresh start” because the government agreed terms that were too favorable to the company.” This was just one of the factors that might have contributed to the mess but it’s also important to keep in mind that a strong Aden port would be a threat to Dubai’s Seaport the Jebel Ali Free zone as Aden’s port is located in a more strategic area and has deeper harbors which can accommodate bigger container ships.

The recent leasing of two of Somalia’s four most important port’s to DP World and its sister company for a 30 year contract seems to worry me. While I am not against any economic investment for any region of my beautiful country and I love prosperity for my people, I cannot fathom why in the world we would get in such long contracts with a mere investment of 400,000 million. That might seem a lot to the politicians who the bribes might be going in their pockets but to anyone who knows the actual potential value of a port knows that the value of it is in the billions just look at landlocked Ethiopia which pays to Djibouti 850 million dollars in fees ever year to use its port.

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The second issue that worries me is why we would give our ports to such a shady company that essentially destroyed the port of Yemen. We have to keep in mind that a robust seaport at Barbara or Bosaaso will be a threat to Jebel Ali due to the strategic location of these two ports.

An additional issue that should concern us all is the lack of oversight and transparency that is involved in these deals, we hardly know what we are getting ourselves into. It only seems fair to demand we know the contents of these contracts and the fine print. In conclusion, Time will only tell if we are only repeating the failure of Yemen and setting up our next generation for an economic failure.

Wednesday April 12, 2017
By Hassan Nur

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