Somali Magazine September 10, 2023- It provides relief for Ethiopian khat farmers through export rule changes
Following the signing of a bilateral trade deal last week, Somalia is set to begin formally exporting fish and fruit products to neighbouring Ethiopia.
The trade agreement aims to reduce smuggling, which previously forced Somalia to cease cattle exports. It also includes provisions for cross-national trade in services and some items, such as the stimulant herb khat.
Following a Senior Officials meeting on September 5-6, 2023, Ethiopia’s Deputy Prime Minister and Foreign Minister Demeke Mekonnen and Somalia’s Deputy Prime Minister Salah Ahmed Jama co-chaired the signing ceremony in Mogadishu.
Ethiopia and Somalia had a joint Ministerial Commission meeting in Mogadishu, where the two nations signed a Memorandum of Understanding (MoU) to expand bilateral trade ties.
Gebremeskel Chala, Ethiopia’s Minister of commercial and Regional Integration, told The Reporter that the agreement intends to create mutual benefits in the two countries’ commercial sectors.
“In order to increase production and marketing exchange, the government will play its role, so that private business investors are active participants in order to eliminate illegal transactions,” he said.
The Minister stated that due to rampant smuggling, unofficial trade between Somalia and Ethiopia was formerly higher. He emphasised, however, that the new MoU provides a legal framework for explicitly facilitating trade in goods such as livestock, cattle, and other agricultural products from Ethiopia in exchange for Somali exports such as fish and fruits.
According to Gebremeskel, Ethiopian authorities aid private sector partners in navigating bureaucratic impediments and ensuring a simplified procedure for cross-border economic activity, particularly khat export.
Khat is Ethiopia’s biggest export commodity to Somalia, generating more than a quarter of a billion dollars each year when exports to Somaliland, a de facto independent area that is technically part of Somalia, are included.
According to Gebremeskel, Kenyan khat merchants have had more success than their Ethiopian counterparts due to benefits such as reduced remittance costs, a larger merchant network, and better access to banking facilities.
As a result, the Somali government intends to level the playing field for local khat exporters by extending the maximum delivery period to Somalia by 10 days and allowing larger-volume shipments.
“The government was aware of this transaction, and the two countries reached an agreement at the government level on the relevant political decision.” “Senior Trade Officials reviewed the technical details and came to an agreement,” he explained.