The Horn Of Africa States: The Region’s Prospects – OpEd

A little over a century ago, the region was always a net exporter o f goods and services to the outside world. Today, it is a net importer of most of what it consumes. This should pose an important question mark for the leaders of the region. How has the region changed from a net exporter of goods and services to a net importer in just over a century? It is not an easy issue to address in a short article such as this represents but one should note that the Horn of Africa States region needs to work hard. 

The trend we see is not comfortable and especially when we know that the region could do much better than it currently does. This is a severe drain of the meagre resources it receives through its exports and from its migrant populations outside the region. The aid and grants which is received from some helping hands cannot and will not sustain the growing population of the region. They usually take them back, these helping hands, whatever they provided through different channels including employment of their own personnel at the expense of local qualified people.

As Macrotrends, a premier research platform for long term investors reports, the region continues to import more than it exports. As of 2023, the region imported some US$  40 billion (2022: US$ 38 billion) while it exported only half of that at about US$ 20 billion (2022: US$ 18 billion). 

The following are compilation tables by the author of the data Macrotrends has given on the exports and imports of the Horn of Africa States. The institution does not have any information on Eritrea, but which in any way is small and would not change the trends of the region as a whole. 

The exports of goods and services, according to Macrotrends, “represent the value of all goods and other market services provided to the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.”

Macrotrends – The Horn of Africa States: Exports 2020 -2023

The following is another table on the imports of goods and services of the region for the years 2020 to 2023, of course minus Eritrea which does not avail, apparently, such information to institutions like Macrotrends. They include according to Macrotrends, “the value of all goods and other market services received from the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments.”

Macrotrends – The Horn of Africa Imports 2020 -2023

The trade deficit drains the foreign exchange reserves of the region. The run into BRICS as seems to be the case on the part of Ethiopia is not the answer to the dilemma of the growing negative differential between exports and imports and should this trend continue, the region will remain to be always, as is presently the case, at the mercy of others.

The region is required to correct this growing negative trade balance. Most of the imports include food imports when the region can produce more than it needs and can even export, as it used to do in the past. The region can re-initiate the old manufacturing industries and in particular, its clothing industry, its gold industry, its leather industry, and its implements industries at least to reduce the import content of these commodities and more. 

Energy is a substantial bill which adds to the deficit and the region is substantially endowed with local energy sources such as wind, geothermal, solar and hydropower, which it can deploy to reduce the energy import bill. Although it is easily said than done, the oil and gas reserves also offer another opportunity, which the region should emphasize on despite the trend to do away with fossil fuels. This would, however, stay with us over the next hundred some years and the region should not wait long to explore all the possibilities in this regard. Somalia already seems to be working in this respect and the other countries of the region should do the same.

A positive change can only occur when there is the right attitude and the right environment. Currently the continuing civil wars and the instabilities they entail, the drifting apart of the countries of the region, and the continuing interference of foreigners in the affairs of the region are not helpful. The interference of some countries of the region in other’s internal affairs of the same region are not helping either.

The Red Sea and Gulf States dynamics have also negatively impacted the region, and it is where the necessity for the region to collaborate and cooperate is needed. Apparently most foreign parties deal with each country separately and hence play on the weaknesses of each country against the other which weakens the region. A common approach of the region would have done better for the region and would have lessened the issues upon which the foreign interfering parties play. It is where an economically integrated platform for the region would have helped most, allowing for the movement of labor, capital, goods, and services to move easily between the countries of the region.

Could this ever happen – an economically integrated Horn of Africa States region? It is a million Dollar question but the prospect we see, nevertheless, and it is our hope the regional leaders would revisit their books and work towards that goal.