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28 29Building ResilientLivelihoodsResearchThe Cross Border Livestock Trade in Ethiopia and Somaliland- Benefits and ChallengesConisia Shumba - Livelihoods, Private Sector and Value Chains Advisor, Oxfam, SomalilandMustapha Mohammud - Senior Value Chain Advisor, Oxfam, EthiopiaThe cross-border livestock trade in the Horn of Africa is considerable, and governments in the region need to better understandand recognise its valuable contribution. It is important to local and regional economies and also crucial for food security—particularly in marginalised and drought-affected communities. This article, focused on Ethiopia and Somaliland, identifies themany challenges that the cross-border trade has to face.Livestock is the main household asset and a key productiveresource for pastoralist communities living in the borderareas of Ethiopia and Somaliland. Significant levels of crossborder livestock trade exist, but the trade is unsupportedand often actively blocked by governments on eitherside. This represents a lost opportunity for both theGovernments and the populations in the border areas.Part of the problem is that the governments focus ononly the undesirable consequences of cross-border trade:that it is untaxed; is a source of livestock disease; and thefree movement of people and goods are associated withsecurity threats. Most intra-regional livestock cross-bordertrade in the HoA is unrecorded, but estimates value itin excess of USD 60 million. However, only 10% of thiscommerce passes through the official trade channels. 17Recognizing this trade, and then gradually supporting it tobecome more organised with formal modes of exchange,will be crucial if the potential for cross border trade in theregion is to be realised.The Benefits of Cross-Border TradingVibrant livestock trading routeThe comprehensive Livestock Value Chain Analyses (LVCA),conducted in Ethiopia 18 and in Somaliland, 19 show thatlivestock trading is the main economic activity, is a criticalsource of livelihood for the pastoral Somali populations, andis an important link between the borderlands of Djibouti,Somaliland, Puntland and Ethiopia. The cross-borderlivestock trade through the Somali Region of Ethiopia intoSomaliland is one of the oldest and most vibrant crossborderlivestock trading systems in the Horn of Africa.Ethiopia’s Somali Region supplies approximately 60-70% ofthe livestock that is then exported from Somaliland to theMiddle East. Complex market arrangements and chains,involving a wide range of actors, have created a web ofcross-border trade relations that utilise clan affiliations. 20The pastoral livestock marketing in these border areasis said to be the largest movement of live animals tradedanywhere in the world. 2117 http://www.caadp.net/pdf/COMESA%20CAADP%20Policy%20Brief%202%20Cross%20Border%20Livestock%20Trade%20(2).pdf18 Ethiopia Livestock Value Chain analysis, Lante Development Consultancy PLC, 201119 Somaliland Livestock Value Chain Analysis, Muthee A, 201220 Umar 2007 Risk-taking for a Living; Devereux 2006 Vulnerable Livelihoods in Somali Region.21 Majid, 2010, Livestock trade in the Djibouti, Somali and Ethiopian border landsFigure 1: Traditional livestock trading routes (Djibouti,Berbera & Bosaso Corridors)Links to the Middle EastThe Ethiopia-Somaliland cross-border livestock trade flowsare significantly influenced by seasonal factors, that affectboth demand and supply. While livestock are exportedall year round, the most important seasonal factor is theannual Hajj pilgrimage to Mecca in Saudi Arabia. Demandand prices hit their peak during the 70-day period betweenEid al-Fitr and Eid al-Adha in the export markets, and alsoduring major religious festivals and holidays in the domesticmarkets. Prices are depressed during the driest period ofJilaal (January to March) because of low quality livestocksupply—due to scarcity of animal feed, consequent weightloss and poor body condition.Driving the Somali Region’s economyCross border livestock trading provides a livelihood formillions of inhabitants in Ethiopia’s Somali region, includingherders, traders, middlemen, and many other actors thatbenefit from the system. Women in particular are playingan increasing role. Its contribution can be seen in termsof the creation of direct jobs in the livestock marketingchain and in the indirect multiplier effects to other incomegenerating activities—such as merchandise trade, foodand beverages sales, transportation, hay making andanimal pen or enclosure rentals. This makes it one of thedrivers of regional economic diversification, savings andcapital accumulation, and a potentially significant longtermcontributor to the national economy.Crucial for food securityThe cross border livestock trade plays a significant role inensuring local food security, as almost all food items—especially cooking oil, wheat, pasta, rice, and sugar—areimported from the other side of the border with the profitsfrom livestock trading. The occasional border closuresresult in local shortages of key foodstuffs and majorprice rises. The food security benefits of the cross-borderlivestock trading system are of paramount importance, andresult from: [a] the higher purchasing power of livestockproducers through the income generated from favourableexport demand at higher prices; [b] the system beinginterconnected with the financing of cheaper food imports(because they are not taxed) which are then distributedlocally at reasonable market prices; and [c] householdincomes that are generated from cross-border livestocktrading and related activities being used directly for foodpurchases.An enabling environment for livestockThe key enabling environment factors for the Ethiopia-Somaliland cross-border live animal trade, and valuechain, are its proximity and access to niche markets (Arabcountries) and their preference for animals from the Horn. 22Other factors include a positive correlation between agood year and livestock prices; increased demand duringreligious festivals; and the fact that Ethiopia is a livestockproducing country endowed with huge livestock herds.Another factor is that there is increasing demand formilk as a result of accelerated urbanization, and womenusually have full control over milk sales. With 60% of themilk produced at household level now destined for sale,livestock is a key part of women’s economic growth.Figure 2: Ethiopia-Somaliland cross border livestockvalue chain22 Holleman 2002 The Socio-Economic Implications of the Livestock Ban in Somaliland, USAID;Umar 2007.The export market1. The Ethiopian five-year Growth and TransformationPlan (GTP) aims to increase annual meat exports from10 thousand metric tonnes achieved in 2009/2010, to111 thousand metric tonnes in 2014/2015.2. The domestic market provides an important outletfor women and poor producers who often supplyproducts that cannot be used for high value exportdue to quality, quantity and access constraints.3. The cross border trade to neighbouring countries(e.g. Djibouti or Somaliland) is more attractive forpastoralists living on the border, compared to parallelmarket prices in the domestic or official exportmarkets.4. The benefits from live animal export is high, butit carries high risk due to combination of sanitaryrequirements, lower competitiveness and changingdiplomatic relations with importing countries.5. On the basis of SPS requirements, meat exports aremore beneficial and less risky compared to live animalexports.Price differencesAysha communities in Ethiopia witnessed that domesticmarkets do not provide sufficient outlets for the saleof livestock and livestock products. This is becauseprices of livestock in the domestic market are muchlower than anywhere in Somaliland or Djibouti. Forexample, the price of sheep was 500 ETB in Dire Dawawhile it was 650 ETB in Dowele, or more than 900 ETBanywhere in Djibouti. Similarly, the price of sheep andbulls were 750 ETB and 4,230 ETB respectively in Jijigamarket, while the corresponding price in Hargeisawas 960 ETB and 7,650 ETB, respectively. After sellinglivestock for better prices, producers buy consumergoods and other necessities at much lower prices.Challenges and ConstraintsDespite its benefits, major market inefficiencies andchallenges exist in the cross-border trade. These include:high marketing transaction costs; high transport costs;loss of weight and condition by animals on long trekkingroutes; lack of price transparency among most marketbrokers; minimal market infrastructure; and uneven andinadequate market information. The vital contributionof the cross-border livestock trade to the livelihoods ofperipheral societies is an area of tragic neglect in Ethiopia’snational strategic schemes on food security and povertyreduction. In order to benefit from this vast trade, Ethiopianeeds to address a number of challenges.Lack of information: The limited access to market informationat the local level, and the lack of infrastructure, are the majorconstraints for pastoralists seeking to access major marketsand urban centres—where the demand for livestockproducts is growing fast. The poor and uneven access to