In a pivotal August 2025 meeting in Addis Ababa, Somaliland’s Central Bank Governor Abdinasir Ahmed Hersi and Mamo Esmelealem Mihretu, then-governor of the National Bank of Ethiopia (NBE), laid the groundwork for enhanced economic and financial cooperation. Held at NBE headquarters, the talks focused on streamlining payment systems, trade financing, foreign exchange, anti-money laundering efforts, and fintech innovation.
Governor Abdinasir declared, “We are building a future of seamless economic connectivity,” highlighting the transformative potential of the partnership. The two nations agreed to form a joint technical working group to implement frameworks for payments, trade finance, and financial security, with progress expected soon.
A key focus was leveraging Somaliland’s Berbera Port, where Ethiopia holds a 19 percent stake, to boost regional trade, with calls for swift banking and insurance protocols.The $700–800 million trade relationship, dominated by Ethiopian exports like khat, vegetables, coffee, and livestock, stands to benefit from formalizing the khat trade and exploring a Commercial Bank of Ethiopia branch in Somaliland. Berbera Port’s infrastructure, upgraded with over $400 million from DP World, is fully operational, awaiting finalized trade agreements to maximize its use.
Despite Mamo’s resignation, both sides are committed to advancing these efforts with the new NBE governor. The partnership aims to enhance financial flows, reduce informal trade, and drive economic integration in the Horn of Africa, setting a model for regional cooperation.
The two sides agreed to establish a joint technical working group to follow up on these initiatives. Governor Hersi highlighted the strategic importance of Somaliland’s Berbera Port and trade corridor for Ethiopia’s regional commerce, urging swift progress on banking and insurance protocols to facilitate port-use agreements. Governor Mamo, who resigned from his post in the days following the talks with his Somaliland counterpart, welcomed the initiative and pledged to raise the matter with Ethiopia’s Ministry of Foreign Affairs.
The meeting also addressed strengthening financial flows, formalizing the khat trade across the border, and the potential opening of a branch of Ethiopia’s state-owned Commercial Bank in Somaliland. Both governors emphasized their commitment to deepening cooperation to support economic growth and regional stability. Yared Nigussie of The Reporter Magazine caught up with Abdinasir Ahmed to learn more. EXCERPTS:
The Reporter Magazine: Could you walk us through the main talking points of your recent meeting with outgoing NBE Governor Mamo Mihretu?
Abdinasir Ahmed: Our discussions primarily focused on deepening financial and economic cooperation between Somaliland and Ethiopia. We covered issues related to the payments and settlement system, foreign exchange and trade, counter-terrorism financing, FinTech licensing, cross-border foreign exchange operations, and regulatory frameworks for both banking and insurance. These were the main areas addressed during the meeting.
We agreed to establish a working group tasked with translating our arrangements into concrete actions. Its mandate will include designing frameworks, drafting protocols, and receivable missions in priority areas such as payments, trade finance, and anti-money laundering and counter-terrorism financing. We expect the initial work program to be rolled out in the coming months.
We agreed to explore interoperable, efficient, and secure systems. Such arrangements will enable businesses and traders to settle transactions more quickly, reduce reliance on costly informal channels, and directly boost cross-border trade.
What did the cross-border trade talks entail?
Strengthening financial flows will definitely have a positive impact on our trade relations. This can be achieved by improving banking connectivity, simplifying the trade settlement process, and establishing regulatory safeguards that embolden formal cross-border transactions. Both sides are committed to reducing bottlenecks and ensuring the smooth flow of legitimate funds.
How would you describe the banking connectivity between the two countries? Are there any transfer mechanisms currently in place?
At the moment, there is no banking connectivity or interoperable arrangement between our banking institutions. However, establishing such a system
is exactly what we are working toward.
We have agreed to align our approach to FinTech licensing so that innovation can flourish within a regulated environment.
Foreign exchange and trade financing were highlighted during your discussion. What specific mechanisms or frameworks are being considered?
On foreign exchange, we are exploring mechanisms for transparent and well-supervised cross-border transactions that strike a balance between innovation and financial stability.These include guarantees, letters of credit, and risk-sharing mechanisms designed to better support importers and exporters on both sides.
What do you mean by a risk-sharing mechanism?
At the moment, our traders are not well connected, and we don’t have a financial system in place to support their trade activities—whether in cross-border trade financing or in transactions between Ethiopia and Somaliland. Therefore, we need to develop a mechanism that can support and facilitate their trade financing.
In monetary terms, what is the exact volume of trade between the two countries right now? And what are your main export and import items?
The trade exchange between Ethiopia and Somaliland is estimated at around USD 700 to 800 million, with the majority of products coming from Ethiopia. We import a wide range of goods from Ethiopia, including khat, vegetables, coffee, and livestock. Our exports to Ethiopia, however, remain very limited. While our export capacity is minimal at the moment, we are actively exploring ways to strengthen our trade links with Ethiopia and identify potential commodities that could be exported from Somaliland.
What new measures are being considered to formalize or regulate the cross-border khat trade?
Khat is just one of many commodities we trade with Ethiopia. Currently, much of this trade is informal. We are working to formalize our trade relations by establishing the necessary financial infrastructure, regulatory frameworks, and economic connectivity between the two countries. These measures will strengthen trade not only in Khat but also across all commodities exchanged between Ethiopia and Somaliland.
How are the two central banks planning to cooperate on anti-money laundering and combating illicit financial flows?
The two central banks have agreed to strengthen information sharing, align supervisory practices, and jointly build the capacity of their financial institutions. This cooperation will help both countries combat illicit financial activities and safeguard the integrity of their financial systems.
During the meeting, you emphasized the role of the Berbera Port in Ethiopia’s commerce. Ethiopia holds a 19 percent stake in the port. What progress has been made so far in operationalizing Ethiopia’s use of the Berbera Port?
Ethiopia is using the port of Berbera right now, but it is not fully utilizing it. Among the options on the table are customs facilitation measures, logistics and trade financing arrangements, and potential joint investment initiatives that might happen in the future. The measures will make the corridor more efficient, competitive and attractive for Ethiopian traders. At the moment, the economic free zones and the corridor that connects toTog Wajaale on the Ethiopian border has been completed. The only thing that’s under discussion is the trade facilitation and customs agreement about utilization. That’s why we are actually working with the National Bank of Ethiopia to take the lead and to implement what we call the insurance and banking protocol, which is part and parcel of the overall agreement.
What are the commodities passing through Berbera, if Ethiopia is using the port as you stated?
I cannot specifically mention the commodities currently being sent through Berbera, but what I can confirm is that Ethiopia has been using the port for quite some time. The port has now been expanded and modernized with the latest equipment, including operational management systems. Our focus is on scaling up Ethiopia’s utilization of Berbera while also mitigating potential risks associated with Ethiopian trade with other regional partners.
Are there any ongoing infrastructural projects to expedite trade across the region and through the port?
Yes, the infrastructure at the port has already been completed. The port itself has been operational for quite some time. The economic free zone is also fully established, and the corridor connecting Berbera Port to Ethiopia is complete. The remaining task is to finalize the regulatory and cooperation framework to be signed between the governments of Ethiopia and Somaliland.
Previously, the United Arab Emirates’ DP World was engaged in developing infrastructure at Berbera. Has the company completed all necessary construction to make the port fully operational?
DP World is the company managing Berbera Port and has been the main investor in its infrastructure. The multinational logistics company has already invested over USD 400 million in the port, the economic free zone, and related facilities, including around USD 100 million specifically for the corridor. This significant investment has completed critical infrastructure, which will facilitate and streamline trade links between Ethiopia and the wider region.
What’s next for Ethiopia and Somaliland?
The next step is to expedite the engagement between our two governments to finalize the port utilization agreements. A key focus is on the insurance and banking protocols, which were central to our discussions with the NBE. With the recent transition [Mamo’s resignation], we aim to continue these discussions with the incoming NBE governor. Once these agreements are finalized, Ethiopia’s use of Berbera Port is expected to increase significantly.
Did you discuss joint investment schemes at Berbera Port?
We haven’t discussed that particular area in detail yet, but there is potential for co-investment between Somaliland and Ethiopia. Given our strong cultural, social, and economic connectivity, we can enhance these ties by jointly investing in areas that are mutually beneficial.
We allocated 19 percent stake to Ethiopia during the initial stage of the investment, but Ethiopia has not committed to invest that 19 percent stake in Berbera; I don’t think they have invested that 19 percent but maybe in the future, there might be a discussions for Ethiopia to be also to have a share or stake in the Berbera Port and other critical infrastructures in Berbera.
When Ethiopia was assigned the 19 percent stake, what commitment was made?
There was initial interest from the Ethiopian side; it has not yet invested in the 19 percent stake. I am not sure what the reason is for the delay, but the interest was there from the beginning.
There was mention of a possible Commercial Bank of Ethiopia (CBE) branch in Somaliland. How concrete are these plans, and what would be their significance for trade and financial flows?
Our discussions are still at an early stage, but the prospects are promising. A Commercial Bank of Ethiopia branch in Somaliland would expand access to trade finance, provide a formal channel for remittances and foreign exchange, and further integrate our financial sectors.
Looking ahead, how do you see Ethio-Somaliland financial cooperation shaping regional economic integration in the Horn of Africa?
We are very hopeful. We believe that Ethiopia and Somaliland can effectively cooperate and integrate their economies, setting an example for other countries in the region and across Africa to follow.
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