1. REGIONAL ECONOMIC RELATIONS Governance and Development in Africa SOAS & Mo Ibrahim Foundation Addis Ababa March 2012

2. Some poverty indicators UN HDI Ranking of 182 countries Population living below poverty line Life expectancy Djibouti15542%55 Eritrea16553%58 Ethiopia17144%58 SomaliaNo data 48 Sudan15040%58

3. Regional Economic Integration “Regional integration remains the key strategy that will enable African governments to accelerate the transformation of their fragmented small economies, expand their markets, widen the region’s economic space and reap the benefits of economies of scale for production and trade, thereby maximising the welfare of their nations.” UN Economic Commission for Africa “Assessing Regional Integration in Africa IV: Enhancing Intra-African Trade” 2010

4. Economic drivers of co-operation & interdependence Access to Ports Energy security: oil and electricity Rangelands & livestock market chains

5. Port distances from major towns DjiboutiAssabMassawaBerberaPort SudanMogadishu Addis Ababa910 km882 km1163 km964 km1881 km1507 km Asmara617 km763 km115 km1026 km Bahr Dar1021 km987 km1003 km1326 km Hargeisa416 km160 km842 km Dire Dawa303 km937 km472 km Mekele940 km via Kombolcha 899 km Via Kombolcha 391 km1736 km1788 km

6. Djibouti Port May 2000 management agreement with Dubai Port World to 2020 (2008 handling 7.5m tons) 1. Djibouti Port Capacity for 10m tons cargo & 400,000 TEU pa Live animal exports 2007/8: 96,000 shoats; 40,000 head of cattle 2. The Port of Doraleh (11 km East of sea port) New $300m Container Terminal opened 2009: additional capacity of 1.5m TEU A $130m Oil Terminal (370,000 cubic metres capacity)

7. Oil Sudan the only oil producer : 98% of export earnings & 60% of government revenue Ethiopia’s fuel bill is $1.5bn -17.3% of imports 2010 top 3 suppliers: Saudi Arabia ($988m); UAE ($285m); Sudan ($90m) Plans for an oil refinery?

8. Hydro power Ethiopia’s hydro-power potential: 45,000 megawatts Current production 2,022 mw; 2015 target 8,000 mw 2020 target 15,000; planned investment $12bn Export pledges to Djibouti (220mw), Kenya (500mw), Sudan (200mw), …Somalia

9. Livestock trade 1. Northern Somali trade 3,000,000+ head of sheep and goats exported 50-60% of them originate in Ethiopia 2. Kenya market: 80-100,000 head of cattle through Garissa 58,000 through Moyale 3. Sudan market: 40,000 cattle from Amhara to Sudan Growing trade in Camels (54,000)

10. New trends: Ethiopia’s exports 2000/2001 2009/2010 No of live animals exported 4,919 333,752 Value (live animals) US$ 0.2 million US$ 91 million Meat exports 870 metric tons 10,183 metric tons Value (meat) US$1.7 million US$ 34 million

11. Intergovernmental Authority for Development (IGAD) Membership Ethiopia Djibouti Somalia Sudan South Sudan Eritrea Kenya Uganda Key Structural Challenges to Trade Integration in the Horn Lack of complementarities Different types of state Prevalence of informal trading relationships Competing institutional frameworks Regional conflict Donor and national policies

12. IGAD and African trade in the Horn Intra IGAD exports US$m 2007 Intra IGAD imports US$m Africa’s share in exports (%) Top two products Djibouti370m103m43% Food and machinery & transport equipment Ethiopia100m170m8% Food & manufactured goods EritreaNo data33% Food and ores, metals, precious stones Kenya992m28.5m49% Manufactured goods and food Somalia3m385mNo data Sudan28.5m107.5m3% Food and fuels Uganda51m902m33% Food& manufactured goods

13. Economic community Free movement of people Free movement of goods Free movement of capital

14. Questions Q1. Does close economic integration reduce the risk of conflict? What is the evidence from the Horn of Africa? Q2. Can conflict itself be a driver of innovation and integration? Q3. Can economic integration succeed if governments distrust each other? What else has to happen?