Berbera is not being financed by a single patron. It is being financed through a layered arrangement: DP World and its UK development-finance partner are funding and operating the port platform; Somaliland is contributing the concession, land, regulatory architecture and political risk; UAE public finance is paying for important corridor and city infrastructure around the harbour; UK aid has financed a key road bypass; Ethiopia has supplied the commercial logic, but not, on the available evidence, a completed equity cheque. That last point matters. Much of the public language around Berbera still treats Ethiopia as a shareholder. The documentary trail is messier.
The investigation should begin with the distinction between the harbour itself and the corridor that makes the harbour bankable. The upgraded container terminal at Berbera is the DP World concession. The road, bypass, electricity, economic zone and diplomatic package are the supporting ecosystem. Investors care about steel, cranes and draft depth, yes. But in Berbera the real asset is not the quay. It is the possibility of rerouting a portion of Ethiopia’s trade away from Djibouti.
The financing map: who is actually in the deal?
The core harbour financing comes from DP World Berbera under a public–private partnership with the Government of Somaliland. DP World announced a commitment of up to US$442 million for Berbera Port, and the first-phase container terminal opened in June 2021 with a 400-metre quay, 17-metre draft, three ship-to-shore cranes and eight rubber-tyred gantry cranes, lifting annual container capacity from 150,000 TEU to 500,000 TEU. DP World also announced a second phase that would extend the quay to 1,000 metres, increase ship-to-shore cranes from three to ten, and lift potential capacity to 2 million TEU. That second phase is not a casual promise; BII’s later assessment makes clear that its timing depends on future throughput growth and operational need. (DP World)
The original 2016 arrangement gave DP World a 65 per cent stake under a 30-year concession with Somaliland. In 2018, Ethiopia was brought into the structure: Reuters reported that Ethiopia took a 19 per cent stake, leaving DP World with 51 per cent and Somaliland with 30 per cent. The financial details were not disclosed, but Ethiopia was expected to invest in the Berbera Corridor, the road connection from the Ethiopian border to Berbera. (Reuters)
That is where the neat shareholder story breaks down. In June 2022, Somaliland’s Finance Minister Saad Ali Shire said Ethiopia had lost the 19 per cent stake because it failed to meet the conditions for completing the ownership deal, including the required financial contribution. His words were blunt: “Ethiopia failed to meet the conditions… So it has no stake now.” (The EastAfrican)
British International Investment, the UK government’s development finance institution, then entered the picture. In 2021, DP World and CDC Group, later renamed BII, announced an Africa logistics platform covering Dakar, Sokhna and Berbera. DP World contributed stakes in existing assets and expected to invest a further US$1 billion through the platform; CDC committed about US$320 million initially, with up to US$400 million more expected over subsequent years. The Berbera allocation was not publicly broken out. BII’s 2025 Berbera study says BII joined in early 2022 as a minority investor, with Berbera being one of the three initial assets in the DP World–BII platform. (DP World)
So the cleanest version is this: the port is primarily DP World-financed and DP World-operated; BII is a minority investor inside the DP World Africa platform; Somaliland is the public concession partner; Ethiopia’s equity participation appears to have lapsed, unless later non-public arrangements changed the position. The exact BII share inside Berbera, and the precise post-Ethiopia split between DP World/BII and Somaliland, are not fully disclosed in the public materials cited here. That absence is not a footnote. It is part of the risk.
The second financing layer: roads, power and the corridor economy
Berbera’s harbour only becomes strategically serious if trucks can move through Hargeisa and towards Ethiopia without bleeding time and money. The corridor financing is therefore not ancillary; it is part of the port’s value proposition.
The Abu Dhabi Fund for Development has financed transport and energy projects around Berbera and the Berbera–Hargeisa corridor. ADFD’s own project page says it funded work on the Berbera–Hargeisa border road, including restoration of the 16 km road from Berbera city centre to the highway entrance, plus completed and constructed sections elsewhere on the road. ADFD also says that in 2017 it earmarked AED330 million, about US$89.8 million, for critical infrastructure in Somaliland, with part of that amount used for the Berbera–Hargeisa road project. (Abu Dhabi Fund for Development)
The UAE money is not just tarmac. ADFD financed a 7 MW Berbera Hybrid Mini-grid Project at a cost of AED29.3 million, intended to reduce dependence on expensive diesel and support Berbera’s expanding port infrastructure. That is small beside the port capex, but locally it matters: cheap and reliable power is a binding constraint on warehousing, cold chain, light manufacturing and oil-packing operations in a town trying to become more than a livestock and import gateway. (Abu Dhabi Fund for Development)
The UK has financed a different bottleneck: Hargeisa. TradeMark Africa says the UK’s Prosperity Fund financed the 22.5 km Hargeisa Bypass, because every import and export consignment otherwise had to pass through Hargeisa’s congested streets. The UK government announcement said the bypass was designed to reduce the time and cost of moving goods between Berbera Port and landlocked Ethiopia. (TradeMark Africa)
This makes the Berbera financing architecture look rather different from the press-release version. DP World finances the port. BII gives the project development-finance credibility and balance-sheet depth. ADFD finances the hard public works that improve the port’s hinterland economics. UK aid finances a choke-point bypass. Somaliland supplies the legal and political substrate. Ethiopia supplies the demand story — the big prize — but its direct equity financing is doubtful.
Why DP World wants Berbera
DP World’s stated rationale is commercial: Berbera can be made into an efficient regional gateway, especially for Ethiopian transit cargo. Sultan Ahmed bin Sulayem said the second-phase expansion and integration with the economic zone showed DP World’s intention to make Berbera a “viable, efficient and competitive option… especially for Ethiopian transit cargo.” (DP World)
The numbers explain the bet. Before DP World, Berbera was a small port. A World Bank port study recorded Berbera container throughput rising from 36,000 TEU in 2012 to 92,000 TEU in 2016. In the same year, Djibouti handled 987,000 TEU and Mombasa handled 1.091 million TEU. Berbera was not competing with those ports on scale; it was competing on geography, politics and optionality. (World Bank)
By 2024, BII’s evaluation estimated Berbera’s throughput at about 135,000 TEU, up from 82,000 TEU in 2017. Its market share in the relevant gateway range — Djibouti, Berbera and Mogadishu — rose from 9 per cent to 14.3 per cent. BII’s modelling attributes most of that increase not to new Somaliland demand, but to rerouting, “almost all from Djibouti”. That is the core investment thesis: not that Somaliland suddenly becomes a giant economy, but that Berbera clips a meaningful slice of cargo from the Djibouti corridor.
The Djibouti angle is hard to ignore. In February 2018, Djibouti terminated DP World’s Doraleh Container Terminal concession; DP World called it an illegal seizure and launched arbitration. That happened just before Ethiopia’s Berbera stake was announced. Berbera therefore gave DP World a hedge in the same strategic theatre: another Gulf of Aden gateway, closer to Ethiopia’s eastern regions, outside Djibouti’s direct control. (Reuters)
There is another motive too: vertical integration. DP World is not merely buying quay revenue. It is building the port, the Berbera Economic Zone, warehousing, serviced land, registration systems and a Jebel Ali-style ecosystem. The Berbera Economic Zone opened in March 2023, 15 km from the port along the Berbera Corridor, with fiscal and non-fiscal incentives, a one-stop shop, warehousing and serviced plots. DP World also signed IFFCO, a UAE-based food company, for a 300,000 sq ft edible-oil packing plant. (DP World)
This is how DP World earns money in frontier logistics: not by waiting for cargo to appear, but by shaping the whole cargo environment.
Why Somaliland wants it
For Somaliland, Berbera is not just infrastructure. It is statecraft with a balance sheet.
Somaliland lacks wide international recognition, which constrains access to sovereign borrowing, concessional lending and normal diplomatic channels. A large, visible, internationally operated port gives Hargeisa something close to a recognised economic fact. It says: we can sign concessions, protect assets, run customs, host foreign capital and connect to a landlocked regional economy. That is why the port sits at the centre of Somaliland’s recognition politics.
The fiscal logic is equally plain. Berbera is Somaliland’s main overseas trade gateway and plays a central role in imports, livestock exports and customs revenue. A 2025 BII study describes it as Somaliland’s main overseas trade gateway and a platform for private-sector investment in a frontier market with limited foreign direct investment. The same study says Berbera was Somaliland’s first major FDI and first international concession outside the mineral sector.
The development effects are real, but not revolutionary yet. BII estimated that in 2024 the expanded port and Berbera Economic Zone generated US$45.1 million in gross value added and about 2,490 jobs, equal to roughly 1.1 per cent of Somaliland’s 2023 GDP. Net of activity that would have happened anyway, the additional container-related contribution was estimated at US$16.7 million, or 0.4 per cent of GDP, and 921 jobs. That is meaningful in Berbera. It is not yet an economic transformation of Somaliland.
The local effects have also created tension. Reuters reported in 2017 that the port deal triggered a land rush in Berbera, with diaspora investors and businessmen buying plots around the town. A local official told Reuters: “There has been more building in the last two years than in the whole period from 1991.” The same report noted fears over land allocation, clan balance and local political control. Port-led growth is never just growth; in Berbera it re-prices land, votes and identity. (Reuters)
Why the UAE is behind the ecosystem
The UAE’s role is not reducible to DP World. DP World is Dubai-based and commercially driven, but the wider Emirati footprint includes ADFD grants, road financing, energy projects and, historically, military arrangements around Berbera.
In 2017–18, the UAE’s Berbera role had a clear security dimension. Reuters reported in 2018 that the UAE would train Somaliland security forces as part of a deal to establish a military base. In 2019, Somaliland said the UAE military base project at Berbera would be turned into a civilian airport; Reuters reported that the UAE had begun construction in 2017 and that the planned presence had been for 30 years. (Reuters)
This does not mean the port is merely a military project dressed up as trade. That would be too crude. But the UAE’s investment logic is plainly dual-use in the broad strategic sense: trade corridors, food-security logistics, Red Sea access, political influence in the Horn, and optionality near Yemen and the Bab el-Mandeb. ADFD’s road, power and city projects make the DP World concession more useful; the concession, in turn, gives Abu Dhabi and Dubai a durable position on a contested maritime rim.
One should also note the intra-Gulf and Red Sea context. Berbera sits in a region where ports have become diplomatic instruments. Djibouti, Assab, Massawa, Bosaso, Berbera, Mogadishu and Mombasa are not just transport nodes. They are bargaining chips in disputes over shipping, naval access, counterterrorism, food security and recognition. Berbera is perhaps the clearest case because the host polity itself is contested.
Why Ethiopia is the indispensable non-financier
Ethiopia is the reason Berbera attracted serious capital. It is also the weakest link in the financing story.
Ethiopia lost direct sea access when Eritrea became independent, and it has relied heavily on Djibouti for maritime trade. Reuters reported in January 2024 that Ethiopia signed an initial agreement with Somaliland to use Berbera, and that Ethiopia currently relies on Djibouti for most of its maritime trade. BII’s 2025 study states that Ethiopia channels about 90 per cent of its trade through Djibouti; elsewhere in the same study, BII-commissioned material refers to about 95 per cent. The point is not the exact percentage. It is the concentration risk. (Reuters)
From Addis Ababa’s perspective, Berbera offers three advantages. First, it diversifies port access away from Djibouti. Secondly, it may be shorter and cheaper for Ethiopia’s Somali region and eastern hinterland. Thirdly, it provides leverage in negotiations with Djibouti and others. BII’s logistics modelling found that Berbera has become more cost-competitive with Djibouti for some users, with one logistics firm reporting potential savings of 10–30 per cent depending on cargo type and region served. BII also estimated 2024 transport cost savings at US$8.4 million, or US$6.9 million after adjustment for new users.
But Ethiopia did not, on the public record, complete its shareholder role. Somaliland’s own minister said it failed to meet the required conditions. That does not remove Ethiopia from the story; it changes its role. Ethiopia is less financier than anchor customer, political lever and latent sovereign risk. The port’s second phase and the economic zone are far more persuasive if Ethiopian cargo moves in volume. Without a formal, durable Ethiopia–Somaliland transit arrangement, Berbera remains promising but under-scaled.
The 2024 Ethiopia–Somaliland memorandum of understanding sharpened this. Reuters reported that the deal would allow Ethiopia to lease 20 km around Berbera for 50 years for naval and commercial purposes, while Somaliland said Ethiopia would recognise it as independent. Somalia rejected the agreement as having no legal force, insisting Somaliland remains part of Somalia. (Reuters)
The Ankara Declaration later lowered the temperature but did not erase the commercial problem. Ethiopia and Somalia reaffirmed respect for sovereignty, unity and territorial integrity, and agreed to work towards arrangements giving Ethiopia “reliable, secure, and sustainable access to and from the sea” under Somalia’s sovereign jurisdiction. That formulation is diplomatically elegant. It is commercially unresolved. It does not itself tell a shipping line, lender or insurer how a Berbera-bound Ethiopian container clears customs. (Ministry of Foreign Affairs of Türkiye)
Why the UK is in the deal
The UK role is quieter but more politically sensitive than it first appears. Through BII, the UK government has minority exposure to the port via the DP World platform. Through FCDO/UK aid, it has financed corridor infrastructure such as the Hargeisa bypass. This is not a random development project. It is a calculated bet that logistics investment can unlock trade, jobs and lower import costs in one of the Horn’s more stable but legally awkward territories.
BII’s own rationale is explicit: Berbera is a frontier-market port investment that can improve trade infrastructure, enhance market access for Ethiopia and stimulate Somaliland’s economy. BII also says ports make up 80 per cent of its transport and logistics portfolio, and that Berbera provides a case for studying infrastructure impact in low-income and fragile contexts.
The policy tension for Britain is obvious. Development finance likes Berbera because it is commercially plausible, physically buildable and potentially pro-trade. Diplomacy has to live with the fact that Somaliland is not widely recognised and Somalia contests the legal basis of major Berbera-linked arrangements. That is not a reason to avoid the project. It is a reason to stop pretending it is a normal port investment in a normal jurisdiction.
The operational case: better port, still thin volumes
The upgraded harbour is operationally better. BII found that average container vessel size calling at Berbera rose from 1,314 TEU in 2018 to 1,898 TEU in 2024, while average berth time fell from 64 hours to 25 hours. The study estimated that larger vessels and shorter turnaround times generated direct shipping savings and reduced emissions, including an estimated 7,651 tonnes of CO₂ avoided in 2024 from larger vessels, shorter berth time and rerouted overland transport.
But the same evidence cautions against hype. A port with 500,000 TEU capacity handling roughly 135,000 TEU is not yet a regional giant. It is an improved small port trying to become a corridor port. The gap between capacity and utilisation is the commercial risk that sits beneath the geopolitics. If the Ethiopian transit regime does not settle, the port remains a well-equipped gateway serving a modest hinterland.
The Red Sea crisis has also complicated the story. BII notes that since the crisis escalated in late 2023, Berbera saw lower activity in 2024, while Djibouti experienced a substantial increase in container handling and transshipment. That is uncomfortable for the Berbera thesis. If disruption in the Red Sea benefits Djibouti more than Berbera, then Berbera’s competitiveness is not yet automatic; it still depends on service frequency, inland predictability, customs rules and cargo guarantees.
The policy risks: where complacency would be expensive
The first risk is legal sovereignty risk. Somaliland controls Berbera in practice; Somalia contests its authority in law. Investors have decided that de facto control is bankable enough. That may be rational. But any Ethiopia-linked naval or recognition deal increases the chance that the port becomes a front line in sovereignty politics rather than simply a commercial asset.
The second risk is transit incompleteness. BII’s interviews found residual constraints on capturing more Ethiopian trade, including the absence of a formal transit agreement, gaps in customs coordination and regulatory clarity. That is the unglamorous stuff that decides whether cargo moves. A 17-metre draft does not compensate for a border file that nobody recognises.
The third risk is over-dependence on one operator and one geopolitical sponsor. DP World brings competence and capital. The UAE brings roads, grants and influence. Somaliland gains a powerful patron, but also concentration risk. If relations sour, or if regional politics shifts, Hargeisa has few alternative financiers with comparable appetite for Somaliland risk.
The fourth risk is local political distribution. Land values, jobs, contracts and customs revenue are being reallocated. Reuters’ 2017 reporting on land tensions in Berbera is not old noise; it is a reminder that port finance lands in a clan-political economy, not on an empty balance sheet. The more successful Berbera becomes, the more distributional conflict it may create unless land titling, municipal revenue sharing and local employment are handled transparently. (Reuters)
The fifth risk is developmental over-claiming. BII’s own impact work is careful: data gaps are significant, macroeconomic effects in Ethiopia were not incorporated, and pass-through of cost savings to consumers cannot be precisely measured. The gross economic impact is useful; the net additional impact is smaller. This should be the tone of serious policy discussion — hopeful, but not drunk on the ribbon-cutting.
So who is financing Berbera, really?
Berbera is financed by a coalition whose members want different things from the same harbour.
DP World wants a commercially defensible Gulf of Aden gateway and a logistics ecosystem modelled on Dubai’s own port-zone strategy. BII wants development impact, trade efficiency and exposure to African logistics infrastructure through a seasoned operator. The UAE wants influence, corridor control, food-and-trade optionality and strategic depth near the Red Sea. Somaliland wants revenue, jobs, investability and international legitimacy. The UK wants trade-led development without having to resolve Somaliland’s recognition question. Ethiopia wants sea access and leverage, but its promised equity role appears not to have materialised.
That is the crux. Berbera is not merely a port project. It is a financed argument about who gets to turn de facto control into economic fact. The harbour has better cranes now. The harder question is whether the politics around it can carry the weight those cranes were built for.
