How the Houthi’s Bab Al Mandab Strait Blockade is Affecting Africa’s Marine Geoeconomics
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How the Houthi’s Bab El-Mandab Strait Blockade is Affecting Africa’s Marine Geoeconomics
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By Saniya Fatima
April, 2024
One of the most significant international trade ramifications since the Israel-Palestine conflict reignited in October last year has been the Houthi blockade of Israeli, UK, and US-linked trade through the Bab El Mandeb Strait. The blockade is choking the Suez Canal and affecting the Red Sea economy, also causing shifts in Africa's maritime landscape. Ports along the Cape of Good Hope are experiencing a surge in rerouted traffic, beckoning a relook at their untapped potential. Additionally, Red Sea ports in Somaliland and Egypt are experiencing a rise in their geostrategic stakes, despite a decline in activity. However, the immediate economic effects may be overshadowed by the long-term geopolitical ramifications of increased investment in alternative routes, potentially reshaping the landscape of global trade.
The Cape of Good Hope Travails Give Southern African Ports Hope of Economic Potential
A map showing the Middle East and Horn of Africa region. (Source: U.S. Energy Information Administration)
As the Houthis tightened their grip on the Bab Al Mandeb strait in response to the genocide in Gaza, many shipping companies transporting goods through the Red Sea are diverting to the longer but more secure route navigating Africa's southern tip, known as the Cape of Good Hope, to avoid the blockade. The shift has increased demand for bunkering and restocking services at South African ports, particularly Durban, Cape Town, and Gqebera (previously known as Port Elizabeth). While these ports have benefited from increased activity, inefficiencies and logistical challenges have hindered their full utilization.
This constraint has forced certain marine businesses that use the Cape route to turn to Madagascar (Toamasina), Mauritius (Port Louis), and Namibia (Walvis Bay), for restocking and bunkering services. While global shipping will eventually return to the shorter and less expensive Red Sea and Suez Canal, the crisis has brought these African ports to the forefront and highlighted their potential. With countries like Namibia already attracting investments in their port facilities from the EU and China, given their newfound strategic importance to the global energy supply chain with the discovery of oil and green hydrogen, the blockade is likely to fuel further investments and shipping activity and increase competition with their regional peers for investments.
However, despite their unfolding promise, these ports are unlikely to fully substitute the Red Sea and Horn of Africa ports.
Contested Somaliland Attracts Increased Naval Investments as Geostrategic Significance Upticks
The Port of Berbera in Somaliland, located fewer than 300 kilometers south of Yemen, is rapidly emerging as a crucial strategic foothold in the Horn of Africa. For instance, the UAE has begun securing its security and commercial interests in the Red Sea by establishing its presence in Berbera since 2017. Aside from a 51% stake in the commercial project, the UAE also trains Somali security personnel as part of a deal to create a military base. Given that the UAE regards Yemen's Houthis as a security threat since the Yemen war, the UAE is increasing its military presence in Berbera. According to reports, the UAE has constructed a direct air bridge, facilitating military logistics from the UAE to these vital Somali locations. These developments are likely to be a direct response to the looming threat of a spillover of the Israel-Palestine conflict into the wider Middle East region.
Besides the UAE, Ethiopia is rekindling its stakes in the Port of Berbera and establishing a marine outpost to compensate for its landlocked borders. The memorandum of understanding between the Somaliland government and Ethiopia indicates a likely setup of a naval and commercial base in Berbera. This move, which came three months into the war, is seen as Ethiopia lending Israel a proxy foothold in the Red Sea region. Ethiopia has held historic ties with Israel, also having previously abstained from voting in the UN on an immediate truce in Gaza, in support of Israel.
The increase in investments in the Port of Berbera is yet another geoeconomic move in the busy Horn of Africa region, maneuver in the busy Horn of Africa region, where stakes have risen since the conflict reignited. This is despite the rising costs and decreased cargo at ports in Sudan, Eritrea, Djibouti, and Somaliland. . Much like Berbera’s geoeconomic paradox, Egypt too has attracted investments despite short-term losses.
Suez Canal Vulnerability Increases Egypt’s Reliance on its Gulf Allies
Egypt has faced direct repercussions of the Houthi blockade, with a significant decline in shipping activity due to vessel diversion away from the Red Sea. This has spelled significant economic consequences for the Egyptian economy, as at least 2% of Egypt’s GDP relies on the Suez Canal. The canal, which facilitates about 30% of global container traffic, saw a 40% revenue decline in January. This decline has exacerbated Egypt's economic challenges, leading to increased reliance on bailouts from the IMF and its Gulf allies. The UAE has already announced a major $35 Billion investment as part of which it will develop a peninsula on the Mediterranean coast called Ras El-Hekma. The Abu Dhabi Ports Alliance (the regional competitor to the Suez Canal Company) earlier signed agreements to implement projects that include managing and operating docks and ship terminals in the ports of Sharm El Sheikh, Hurghada, Sokhna, and Safaga. With the addition of Ras Al-Hikma to the list of ports under UAE, Abu Dhabi will link the Red Sea and Mediterranean ports, expanding its foothold over Egyptian ports on the one hand, and countering the Suez Canal competition with the UAE ports on the other.
Additionally, Saudi Arabia is also in conversation to make a large-scale land investment in Egypt with Ras Gamila, which is near the Sinai resort city of Sharm El-Sheikh. . These investments, although injecting much-needed economic fuel into the Egyptian economy, have meant that Egypt has had to barter control over large swathes of its maritime resources to keep its economy afloat.
Conclusion
The war between Israel and Palestine, as well as the Houthi embargo, have created a geoeconomic dilemma in the continent. On the one hand, Southern African countries are experiencing an immediate economic upswing that they are not yet leveraging. Red Sea ports, such as Egypt and Berbera, are witnessing greater investment despite lower traffic in the immediate aftermath. These developments underscore the need for African officials to carefully consider long-term interests and navigate challenges related to resource control and economic diversification amidst ongoing humanitarian and security crises.
Saniya Fatima is a Senior Analyst at Botho Emerging Markets Group