DP World plans logistics complex in Ethiopia to serve landlocked African countries

Ports operator's facility would strengthen its position on the continent, says chairman Sultan bin Sulayem

DP World is planning a major logisitics hub in Ethiopia. Charles Crowell / Bloomberg

DP World is planning to set up a logistics facility in landlocked Ethiopia to transport goods from a port it is developing in neighbouring Somaliland, in its latest foray into Africa where it has faced dual challenges.

The Nasdaq-listed company's logistics complex in the east African country would transport goods to various landlocked states on the continent, said Sultan bin Sulayem, chairman of DP World, according to UAE news agency Wam.

DP World could not be immediately reached when contacted for comment.

The company, one of the world's top five largest port operators, signed an agreement with the Somaliland government in 2016 to invest $442 million (Dh1.62 billion) in the Port of Berbera on Africa's east coast and manage it in a 30-year concession. In March, Ethiopia became a 19 per cent shareholder in the Port of Berbera, with DP World controlling 51 per cent stake in the project and Somaliland holding the remaining 30 per cent. However, Somalia, which doesn’t recognise Somaliland’s 1991 declaration of autonomy, dismissed the deal as “null and void”.

The dispute over plans to develop the port in Somaliland risks destabilising the Horn of Africa region, the semi-autonomous territory’s foreign minister Saad Ali Shire said in March.

DP World's planned facility in Ethiopia would strengthen its position in Africa, Mr bin Sulayem said.

"Business groups in Dubai can always benefit from DP World’s presence in different countries including Rwanda and Egypt where re-exporting opportunities are abundant" he remarked during an open dialogue with trade and business groups in Dubai.

DP World is also embroiled in a dispute with Djibouti, west of Somalia. The company filed a legal case against the government of Djibouti in February after the authorities suddenly ended its contract to operate the country's Doraleh container terminal.

DP World said last month it will not consider alternative legal options outside a court settlement in its dispute with the Djibouti government and is awaiting a ruling by the International Arbitration Court in London.

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The company is expected to post a 17 per cent growth in second-quarter profit compared to the same period a year ago, Egyptian investment bank EFG Hermes said in a report on regional equities last week.

DP World’s terminals in Europe, Middle East and Africa, which also includes the home port of Jebel Ali in Dubai, recorded growth in the first quarter of 2018, up 9.8 per cent the same quarter last year.

Despite some headwinds it's facing in Africa, the company remains bullish on African markets’ potential for growth and has continued to expand there.

It won a 30-year concession to develop a $1bn deep-water port along the Democratic Republic of Congo’s Atlantic coast in March. DP World will get a 70 per cent stake and the DRC government keeps a 30 per cent holding in the project. Construction will start this year and take two years to complete.