The role of transnational ethnic on socio economic integration in the horn of africa

I
COLLEGE OF LEADERSHIP AND GOVERNANCE
SCHOOL OF DIPLOMACY AND INTERNATIONAL
RELATIONS
THE ROLE OF TRANSNATIONAL ETHNIC ON SOCIO-
ECONOMIC INTEGRATION IN THE HORN OF AFRICA:
WITH SPECIAL FOCUS ON ETHIOPIA AND SOMALIA
ByMohamed Aden Farah
ID. No ECSU1701733
Advisor: TsegaGebrekristos (Ph.D)
Requirements of Partial Fulfillments of Masters of Arts Degree in Diplomacy
and International Relations, School of Diplomacy and International Relations,
College of Leadership and Governance, The Ethiopian Civil Service
University.
October, 2020
Addis Ababa, Ethiopia

II
Contents
Declaration ............................................................................................................V
Approval Sheet .................................................................................................... VI
Dedication: .........................................................................................................VII
ACKNOWLEDGEMENT .................................................................................VIII
ABSTRACT ........................................................................................................ IX
LIST OF ACRONOMS: ........................................................................................X
CHAPTER ONE.................................................................................................... 1
1 Introduction..................................................................................................... 1
1.1 Background of the Study............................................................................... 2
1.2 Statement of the problem............................................................................. 3
1.3 General Objective of the Study ..................................................................... 5
1.3.1 Specific Objective of the study .................................................................. 6
1.4 Research Question........................................................................................ 6
1.5 Significance of the Study............................................................................... 6
1.6 Scope of the Study ........................................................................................ 7
1.7 Limitation of the study.................................................................................. 7
1.8 The Organization of Research ....................................................................... 8
Chapter Two .......................................................................................................... 9
2. Literature Review............................................................................................ 9
2.1 Introduction ................................................................................................. 9
2.2 The Concept of Economic Integration......................................................... 10
2.2.1 Functionalism Approach of Economic Integration................................... 10
2.2.2 Neo-Functionalism Approach of Economic Integration ........................... 10
2.2.3 Inter-governmentalize Approach of Economic Integration...................... 11
2.2.4 Liberal Inter-governmentalism Approach of Economic Integration ......... 12
2.3 Types of Integration.................................................................................... 13

III
2.4 Structural Factors of Economic Integration................................................. 14
2.5 Theories of Economic Integration ............................................................... 15
2.6 Traditional Transnational Ethnic Cross-Cutting Economic Integration......... 19
2.7 Contemporary Economic Integration.......................................................... 21
2.8 Empirical Review of the Study..................................................................... 24
2.9 Conceptual Framework of the Study ....................................................... 27
CHAPTER THREE ..............................................................................................29
3. RESEARCH METHODOLOGY ......................................................................29
3.1 Introduction............................................................................................. 29
3.2 Research Approaches and Design............................................................ 29
3.3 Population ............................................................................................... 29
3.4 Sample Frame and Sampling Techniques................................................. 30
3.5 Source of Data......................................................................................... 30
3.6 Sample Size Determination...................................................................... 30
3.7 Data Collection Tools............................................................................... 31
3.8 Data Analysis ........................................................................................... 32
3.9 Ethical Consideration............................................................................... 32
Chapter Four.........................................................................................................33
Data Analysis and Interpretation...........................................................................33
4.1 Introduction:............................................................................................ 33
4.2. The political role on Socio-economic integration between Ethio-Somalia.. 34
4.2.1. Policy framework .................................................................................... 36
4.3. Political Importance of Ethio-Somalia Socio-economic Integration:........... 38
4.4 Ethiopian Scholarships impact on long term Diplomatic Relations of the
countries........................................................................................................... 39
4.4.1 Turdibi Custom and Immigration Station between Ethiopia and Puntland
State of Somalia:............................................................................................... 42

IV
4.5. Socio-economic integration importance for Ethiopia and Somalia............. 44
4.6. The transnational role of instability to stability and good relationship ...... 47
4.7 The Role of Business People: ................................................................... 50
4.8. The contribution of private institutions ..................................................... 52
4.8.1 Ethiopian Airline contribution role of socio-economic integration ....... 52
4.8.2 The Role ofEthiopian Private Universities ................................................ 55
4.9. Opportunities on Ethio-Somalia socio-economic integration..................... 56
4.9.1 Transnational Ethnic positive contribution on socio-economic integration
......................................................................................................................... 57
4.9.2 Ethiopia’s Industry and Agriculture products to Somalia market:............ 58
4.9.3 Somalia’s Seafood and Salt and Ethiopia’s Populated Market .............. 59
4.10. Challenges for Socio Economic Integration .............................................. 61
4.10.1. Security Challenges ............................................................................... 62
4.10.2 Lack of Infrastructure........................................................................... 62
4.10.3Slow Plan Implementation...................................................................... 62
CHAPTER FIVE ..................................................................................................64
Summary, Conclusions and Recommendations ................................................ 64
5.1 Summary of Findings ............................................................................... 64
5.2 Conclusions................................................................................................. 66
5.3. Recommendations..................................................................................... 67
5.3. References .....................................................................................................69

V
Declaration
I hereby declare that the thesis on the title, “The Role of Transnational Ethnic on Socio-
Economic Integration in the Horn of Africa: with special focus on Ethiopia and Somalia.” is my
original work and that all sources that have been referred to and quoted have been dully indicated
and acknowledged with complete references.
I understand that non-adherence to the principles of academic honesty and integrity, falsification,
falsehood of any idea, data, information or source will constitute sufficient ground for
disciplinary action by the University and can and evoke penal action from the sources which
have not been correctly cited or recognized.
Signature: __________________________ Date: ____________________
Mohamed Aden Farah ID. No ECSU1701733
This thesis has been submitted to the examination with my approval as a university advisor.
Name of Advisor: TsegaGebrekristos (Ph.D)
Signature: ________________________ Date: _____________________

VI
Approval Sheet
The thesis entitled “The role of transnational Ethnic on Socio-Economic Integration in the Horn
of Africa: with Special Focus on Ethiopia and Somalia” by Mohamed Aden Farah is approved
for the “in partial fulfillment of the requirements for the award of a Master‟s Degree in
Diplomacy and international relations”.
Approved By Board of Examiners:
Advisor:
Name: ______________________________ Signature ___________ Date: ________________
External Examiner:
Internal Examiner:
Head of the Department:

VII
Dedication:
I dedicated to my beloved Family and of course, my inspiration to the queen of my heart, my
beloved wife: Kawsar Ahmed Hussein. This work is also dedicated to my little and lovely Son
Ahmed Mohamed Aden.

VIII
ACKNOWLEDGEMENT
I would like to praise Allah for giving me the ability and the resilience to complete this work.
The accomplishment of my thesis that would represent a significant achievement for my life,
which I also hope, it will contribute for many people progresses particularly for the people of
Horn of Africa. Thus, Allah deserves enormous acknowledgment. First, I would like to thank my
advisor Dr. Tsega Gebrekristos for her supervision, and significant contribution and the guidance
to the right direction which has made possible the completion of this research.
In addition, I would like to express my honestly warm appreciation and sincere thankfulness to
all Ethiopian Civil Service University staff particularly to the College of Leadership and
Governance (CLG) and the School of Diplomacy and International Relations (SDIR) staff. I will
never forget the deeply indebted for the help of Abdiweli Mohamed Ali (PhD) the former Prime
Minister of Federal Democratic Republic of Somalia as well as the former President of Puntland
State of Somalia who helped me a lot for my capacity building. Finally, I would like also thank
my family and friends that helped me the accomplishment of my thesis. As well, I would never
forget the great support of Mr. Endale Nigussie Aman.

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ABSTRACT
The Horn of Africa is a regional block that comprises four countries namely Djibouti, Eritrea,
Ethiopia and Somalia. They recently formed economic integration organization adopted by
Ethiopia, Somalia and Eritrea that called Horn of Africa Economic Integration. It was
established in 2018, yet it is under the process to create the least form of economic integration
which is aimed to achieve Free Trade Area (FTA). Accordingly, this paper probes to identify the
opportunities and challenges associated with the regional economic integration agenda of the
Horn of Africa. This paper also reviewed a study conducted by researchers regarding Horn of
Africa economic integration. The study employed purposive and stratified sampling. To select
research site accessibility of the area was considered as a major criterion purposely selected
Garowe of Puntland State from the Federal Government of Somalia, Addis Ababa and Jigjiga
from the Federal Democratic Republic of Ethiopia. Moreover, the target population stratified
through the various groups as a target. The study used qualitative approach for data collection
through unstructured interview conducted with these two countries officers to investigate the
opportunities and challenges for these two countries economic integration process. The study
analyzed qualitatively the data collected through documents and an in depth interview. The data
was analyzed using themes and explanations while comparing and contrasting the findings with
the literature review of the study. While these two countries lacks both financial and human
capacity to fulfill their objectives, absence of regional institutions such as necessary
infrastructures are the major challenge, while there are also another challenges like subsequent
security threats such as terrorism, pastoral conflict and ethnic tensions, even though there is an
opportunities of transnational ethnic economic integration between these states to make close
and smooth relationship between Ethiopia and Somalia and promote socio-economic
integration. Still there is informal trade integration between the transnational ethnic of these
countries in a wider economic activities. The finding of the study provides that the root causes of
the conflict and poverty in Ethiopia and Somalia are lack of strong and sustainable socio-
economic integration. The study also found that the transnational ethnic between Ethiopia and
Somalia may play great role for the achievements of good diplomatic relations, security and
political stability as well successful socio-economic integration between Ethiopia and Somalia.
Therefore, it is recommended, that the countries establish a joint formal organization that
facilitates the socio economic integration of the transitional ethnic communities and develop
projects and strategies that work for its sustainability.
Key words: Horn of Africa, regional diplomacy, regional socio-economic integration, Ethiopia
and Somalia.

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LIST OF ACRONYMS:
IGAD Intergovernmental Authority on Development
IGADD Intergovernmental Authority on Drought and Development
ECA Economic Commission of Africa
RTA Regional Trade Agreements
AU African Union
ECOWAS Economic Community of West African States
EAC East African Community
COMESA Common Market for Eastern and Southern Africa
SADC Southern African Development Community
ECCAS Economic Community of Central African States
CENSAD Community of Sahel–Saharan States
AMU Arab Maghreb Union
FTA Free Trade Agreements
CU Custom Union
CM Common Market
AfDB African Development Bank
UNECA United Nation Economic Commission for Africa
KPMG Klynveld Peat Marwick Goerdeler
ILO International Labour Organization
UNCTAD United Nations Conference on Trade and Development
RECs Regional Economic Communities
UNDP United Nations Development Programme
MoU Memorandum of Understanding
ECSU Ethiopian Civil Service University
CLG College of Leadership and Governance
SDIR School of Diplomacy and International Relations

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CHAPTER ONE
1 Introduction
The Horn of Africa countries share a lot of common features such as the society physical
appearance which may be differentiated Horn of Africa countries from the other continent of
Africa. There is also enormous diversity among them, description each country has unique in a
lot of compliments, while they share ethnic identities and cultures. The borders between these
countries are colonial and do not represent homogenous ethnic or cultural closures. The people
have had a long history of living together and are deeply familiar with each other cultures and
ethos, the physical characteristics such as climates, soils and rivers of the region are important
factors of complementarities (Assefa, 2002).
According to the Bereketeab, (2013), Djibouti stands out among the countries of the region for
being the smallest in terms of territory and population, for the structure of its economy and
society /mostly urban and essentially dependent on services rather than agriculture/It does,
however, share many of the social problems of the others. It is also very much affected by
developments in its neighbors - Ethiopia and Somalia, with the former of which it has important
economic relations, especially through the Addis Ababa-Djibouti railway (Redie, 2012).
Eritrea is the youngest state, having achieved formal statehood only in 1993, after constituting a
part of Ethiopia. It is the second smallest country of the region, both in terms of territory and
population (Ibid).The Horn of Africa countries there is no ethnic boundaries between them,
every two countries shares one or more of the same ethnic along their common border, which
may be an opportunity for socio-economic integration of the region and also when it comes for
an economic integration each country.
The Horn of Africa is endowed with rich natural resources including agriculture, water, and
energy. Horn of Africa is located along one of the most crucial sea lanes for international trade.
Its proximity to the oil producing nations of the Arabian Peninsula as well as its hosting the
headquarters of the African Union, the United Nations Economic Commission for Africa,
Intergovernmental Authority on Development (IGAD) and several other indigenous and
international nongovernmental organizations renders the Horn of Africa extremely important in
terms of geo-political considerations on the international level (Daniel, 2002).

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1.1 Background of the Study
The Horn of Africa is defined as the region consists of Djibouti, Eritrea, Ethiopia, and Somalia;
it is a particularly interesting geo-political and geo-strategic region. A major amount of
international trade passes through its waters. (Rondos, 2016).The countries of Horn of Africa
have shared a diversity of geography, history, population, politics, and culture that has made the
region so prone to conflict within its societies and between the countries (Alexander, 2016).
The existing knowledge of region was poverty community level conflicts as well as states level
transnational ethnic also were sources of conflict in the Horn of Africa. The political history of
the Horn of Africa is characterized by armed conflicts, state violence, political repression, and
protracted socio-political conflicts (Gebrewold, B., 2017). Horn of Africa suffers from instability
and disputes, and that makes the region one of the most unstable areas around the world. Fulgence
(2015), stated that the region became one of the poorest in the world due to interstate and intra-
state conflict which has extensive negative impacts on the environment in the Horn of Africa with
leading causes like grievances, government behavior and interests, resource scarcity and trans-
border strife as well as internal migration and climate variability (Solomon, 2018). There were
also in the Horn of Africa the harmful consequences of the armed clashes on civilians by
revealing everlasting and malicious effects of gun use on air, land, and water borders (Catley,
Lind &Scoones2016).
The gap identification in the Horn of Africa there was lack of socio-economic integration and
security instability in the region in addition, transnational ethnic were assumed the sources of
conflicts without designation of economic opportunities between states. Therefore, the study is
going to provide positive side of the transnational ethnic play role on socio-economic integration
in the Horn of Africa. Since the Horn of Africa countries have severed long period of time lack of
socio-economic integration between the region and the main reason for the financial difficulties
that the region struggles from is the constant frictions, fights, political tension and economic
slowdown (Conteh, 1998). It has been reported on several accounts that the human populations
often undergo the negative consequences of the clashes (Ismael, 2007).
It is important because Horn of Africa has severed conflicts and poverty long period of time
caused by the division of same ethnic and the colonial demarcation boundaries. Therefore the

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eradication of the poverty and the conflicts in the Horn of Africa needs to manage transnational
ethnic in positive for the socio-economic integration in the Horn. This would help for both
poverty reduction and conflict minimization through socio-economic integration implementation
initiatives in which transnational ethnic may play Lion‟s share.
Critical nodes of energy driving countries closer together have emerged as a result of Ethiopia‟s
thirst for growth, and need for infrastructure facilitating sea access routes in particular, as well as
other major economies in the sub-region through enabling infrastructure beyond national
borders. The corridors and transitional infrastructure may have community ownership since the
Horn of Africa is a region that all the borders between the states resided one or more
transnational Ethnic in both sides.
This research may fill the gap by exploring the positive side of the transnational ethnic that may
have contribution for poverty reduction and conflict resolutions through socio-economic
integration in the Horn of Africa. In addition, the study may fill the gap by providing coherent
data of transnational ethnic contribution of socio-economic integration in the Horn of Africa
based on ethnic relationship that may enable the region to collaborate each other on the poverty
reduction and strengthening security and economic growth of the region. The transitional ethnic
have common identity that would encompass and transcend the traditional ethnic lines and clan
divisions that characterize Somalia, Ethiopia and the wider Horn, and could contribute to conflict
resolution in the region (Zhu Zhe, 2019).
The overall aim of this study will be helping create a comprehensive socio-economic integration
through transitional ethnic tool would be multidisciplinary approach to conflict resolution that
simultaneously addresses the economic growth in the region as well as reducing the sources of
violence and poverty. Understanding the two-way relationship between poverty and conflict
would help to develop a new framework that brings peace-building and development closer
(Ismail, 2019).
1.2 Statement of the problem
The Horn of Africa has faced a numerous of challenges that include several disaster and conflicts
in both interstate and intrastate as well as terrorists attacks, high level of poverty, and slow speed

4
of growth in infrastructure and human capital, lack of socio-economic integration, in addition to
another challenges of consequential external pressures and influences. Horn of Africa states
confronted several serious wars and conflicts based on land ownership because of colonial
ethnic divisions which resulted lot of people‟s lives lost as well as properties damages and
economical loss of the region.
The Horn of Africa populations have endured many inter-state and intra-state armed conflicts.
Although interconnected, the region‟s conflicts occur at several levels, including direct inter-
state wars and armed conflicts; intra-state civil wars and conflicts; and inter-communal
conflicts (Kidane, 2011).Horn of Africa is known as a region of conflict, poverty as well as
lack of socio-economic integration for the same time the region has still chance to change its
previous picture, while some note that it has remained one of Africa‟s most conflicted and
unstable regions, others draw attention to the emergence of some unique experiments in
managing diversity, state formation and governance, and forms of engagement with outside
cultures and influences (Redie, 2012).
Whether seen from the perspective of state, intra-state and inter-state conflicts, the absence of
peace in the Horn has its roots in a long and complex history, political economy, state formation
processes and struggles, international intervention, identity conflicts and environmental change
(Redie, 2012). However, it is recognized the root causes of conflicts in Horn of Africa the
transnational communities normally recognized to be part of the root causes of conflict,
Transnational Ethnic again suffered from border conflicts.On the other hand transnational ethnic
could be also the best tool to settle the previous conflict and disputes and may play great role on
the implementation of the socio-economic integration of the region.
According to Tesfaye,(2002) in the Horn of Africa, a renewed interest in revitalizing and
resuscitating came also into existence that resulted in the transformation of Intergovernmental
Authority for Drought and Development (IGADD) in 1996 into Intergovernmental Authority on
Development (IGAD) with a view of attaining, among other things, the promotion of food
security, sustainable environmental management, peace and security, inter-regional trade and
development of improved communication infrastructure in order to enable the sub-region to
interact and compete in the global economy, eventually leading to regional integration.

5
Horn of Africa has faced the opportunities and the challenges posed by competitive global
economy, nations are moving to integrate their economies with those of their neighbors to create
larger and more competitive regional economic blocs to engage in international trade. This move
is necessary in the Horn of Africa, where the combined impact of relatively small economies, the
legacy of colonialism, misrule and conflicts undermined the share of the continent in global
market (Healy, 2011).
Therefore, in order to address the problems of instability and the border disputes between the
states particularly between Ethiopia and Somalia to create initiatives to be carried out in
pursuance of regional integration of Ethiopia and Somalia as well as the rapid socioeconomic
development of the continent, is more reliable than the previous attempt particularly, in the
period 1960-1980 witnessed the emergence of the major regional integration schemes that
pushed forward the continent‟s integration agenda nonetheless, overall progress over the last five
decades has been sluggish (Sako, 2006).
There are also challenges of overlap regional integration bodies in the region; all reflecting
competing yet ineffective economic integration blue-prints. In addition, the nature of economic
structure of the Horn of Africa seems is competitive to each other and trade instead of regional
integration among them which is very low (Dawit, 2017). Another challenges, whenever regional
integrations organization is formed colonial legacy and previous and the past problems are
challenged because of the people concentrated the age old problems instead to settle the previous
differences and to design the future socio-economic integrations and utilize the advantages of
transnational ethnic of the Horn of Africa by customs union and borderless trade. However, due
to emerging barriers to the socio-economic horn of Africa remains weak and lacks detailed data
on the prospects and problems may exist (Mzukisi, 2007).
1.3 General Objective of the Study
The main objective of the study is to analyze the socio-economic integration of smaller Horn of
Africa and the role of transitional ethnic. Although the socio-economic integration was of
Ethiopia, Somalia and Eritrea, the research is particular Ethiopia and Somalia realizing as sub-
regional integration. It also reviews relevant socio-economic perspectives on inter-state relations
and socio-economic for sub-regional integrations in the Horn of Africa;

6
1.3.1 Specific Objective of the study
In the process of analyzing the relevant issues attempt will also be made to:
 Identify the current inter-state relations and the future socio-economic integrations in the
Horn of Africa;
 Examine the Transnational Ethnic role-plays on socio-economic integration in Horn of
Africa specially in Ethiopia and Somalia;
 Assess the contribution of transnational ethnic on regional integration initiatives in the
Horn of Africa and mainly between Ethiopia and Somalia;
 Explore a socio-economic integration opportunities in the Horn of Africa particularly in
Ethiopia and Somalia;
1.4 Research Question
This study has examined and analyzed the following basic research questions:
1) What are the contributions of the transnational Ethnic on socio-economic integration in the
Horn of Africa?
2) Can Transnational Ethnic be tool to create socio-economic interdependence between Ethiopia
and Somalia?
3) What are the challenges on socio-economic integration of Horn of Africa especially between
Ethiopia and Somalia?
4) What are the leadership role to create political stability and socio-economic interdependence
in the Horn of Africa?
1.5 Significance of the Study
The Horn of Africa socio-economic integration establishment may lead to the region economy
growth and political stability by exchanging its rich of resources, through economic cooperation
between these countries. The consideration of the nature and scope of their socio-economic
relation implications for sub-regional integrations the scheme of the Horn of Africa, is believed
to enrich global economic integration as well as the region‟s economy growth for its geography
location. Mainly, the study may make contribution to the knowledge on socio-economic
integration in the Horn of Africa on transnational ethnic tool to be an opportunity to implement

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the integration of Horn of Africa which is in the process to happen, and to eradicate the previous
name of the region known by conflict.
Besides, the special focus on Ethiopia and Somalia relations on the sub-regional socio-economic
integration schemes in the Horn of Africa will have important contribution to the knowledge on
the role of the regional economic integration contexts. Besides, this study may provide as for
further studies and investigations that may be interested to deal with the positive side of
transnational ethnic on the inter-state relations and regional integration schemes in the Horn of
Africa and practical example.
1.6 Scope of the Study
This study is concerned on socio-economic integration of Horn of Africa in particular to Ethiopia
and Somalia in the context of sub-regional integration schemes. The integration parameters will
be based on socio-economic and the role of transnational ethnic in the Horn of Africa in
particular to Ethiopia and Somalia.
The concept of this thesis may be a term Horn of Africa, the sense of Horn of Africa countries
those comprises Djibouti, Eritrea, Ethiopia and Somalia, but the research specific focus on
Ethiopia and Somalia.
1.7 Limitation of the study
It is important to clearly note a major limiting factor in the conducting of this thesis. The primary
data obtained for the study is limited to Ethiopia and Somalia socio-economic integration and
visible role of transnational Ethnic on this issue. Hence, data will be gained from sources of these
countries of Ethiopia and Somalia, the research may address the people whom have deep
information about the concerned issues; the research is limited on primary data as well as some
secondary data like on-line sources and printed documentation. However, with limited
availability of data maximum efforts will be made to analyze obtained data without much
affecting the efforts to realize the overall objectives of the study.

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1.8 The Organization of Research
The thesis is organized in five chapters. The first chapter deals with introduction, statement of
the problem, basic research questions, objective of the study scope and limitation of the study.
The second chapter deals with the theoretical perspectives on socio-economic integration
relations on Transitional Ethnic Communities and Regional Integration. Therefore, the chapter
will briefly discuss the interstate relations in regional background, the concept and basis of
regional integration in the Horn of Africa, and the political dynamics of foreign policy in the
Horn of Africa. The purpose of this chapter is aimed at giving brief view on the nature on
transitional ethnic and applications of these concepts and theories fit for serve as analyzing tools
in the process of the study. The third chapter deals with the research methodology of study. The
research has addressed in qualitative data collection and an analysis technique involves describing and
contextualizing of the socio-economic regional integration in the Horn of Africa. The fourth chapter
assesses and analyses the finding data presentation and interpretation of Ethiopia and Somalia
socio-economic integration and contribution role of the transitional ethnic. The fifth chapter will
deal with the summary of the findings, conclusion and recommendation of the socio-economic
integration schemes in the Ethiopia and Somalia.

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Chapter Two
2. Literature Review
2.1 Introduction
A well-established strand of the literature on regionalism and economic integration has made
clear that economic, geopolitical, and socio-cultural relationships across the globe, for which
Africa is no exception, have been changing rapidly in the last few decades. The world has seen a
dramatic increase in regional trade agreements (RTAs) since the early 1990s (Daniel, 2014).
However, all the others regional interstate cooperation, state promoted regional integration;
regional cohesion, economic integration, regional cooperation, regional integration, and
development integration are mainly government initiatives (Martina, 2008). While
regionalization focuses more on social and economic benefits with more roles for the private
sector, regional awareness and identity stresses the importance of identical traits and ideologies
among countries. Other than developmental integration and perhaps regional cohesion which is
also founded on both social and economic benefits like regionalization regional interstate
cooperation, state promoted regional integration, and economic integration all place emphasis on
economic gains. (Hurrell, 1996) in addition to those examples the World is going to be
connected socially and economically.
According to Bolaños(2016), globalization, changing market conditions, greater competition,
and associated uncertainty in international economic and political relationships have posed new
imperatives for the way countries are organized. The current world is a network of nation states
that tend to integrate their economies in the pursuit of, among others, macroeconomic stability,
economic development, efficiency, and active economic growth. Economic integration at a
regional level seems to be the new global trend.
Mansfield and Milner (1999), for example, indicate that the definition of regionalism is centered
on the relevance of geographical closeness and the nexus existing between economic flows and
policy choices. As ECA and AU (2006) note, regionalism in Africa can be seen as modeled
around the concepts of geographical closeness, the sharing of a common border, and political
collaboration through economic cooperation. It is not surprising that geographical location
characterizes the eight AU recognized regional groupings (ECOWAS, EAC, COMESA, SADC,

10
ECCAS, CENSAD, AMU, and IGAD) in Africa and now Horn of Africa socio-economic is
going to be another one.
2.2 The Concept of Economic Integration
According to Gebru(2016), although the term regional integration has been in existence for a
long time, a precise definition is not easy to formulate. Generally, it refers to the unification of
nation states into a larger whole. In simple terms, it can be described as a dynamic process that
entails a country‟s willingness to share its sovereignty or unify into a larger whole. Broadly
speaking, regional integration can be defined along three dimensions: (i) geographic scope,
illustrating the number of countries involved in an arrangement; (ii) the substantive coverage or
width, that is, the sector or activity covered by the regional arrangement (for example, trade,
mobility of factors of production, macro-economic-policies, sector policies, investment
promotion, infrastructure, agriculture, food security, peace and security, social affairs, tourism,
industry, etc.); and (iii) the depth of integration, that is, the degree of sovereignty a country is
ready to surrender (Niekerk, 2005).
2.2.1 Functionalism Approach of Economic Integration
The functionalist approach, also known as liberal institutionalism, considers that nations
maximize their interest owing to the assistance of international organizations based on functional
rather than territorial principles. According to Mitrany (1946), socio-economic welfare can
guarantee lasting peace because individuals are rational. Migrant‟s initial proposal for Europe
was the creation of a federation. However, political coordination to achieve this was considered
too ambitious and economic integration was adopted as a necessary first step that would build
the foundations for a political union (Guarantee of Peace) (Klaus, 2987).
2.2.2 Neo-Functionalism Approach of Economic Integration
According to Sonny, 2015Neo-functionalism was a popular theory of European integration in the
1950s and 1960s. The most prominent neo-functionalist writer was Ernst Haas in his book 'The
Uniting of Europe' in 1958. The important question that neo-functionalists attempt to ask is: how
does cooperation in specific economic policy sectors lead to greater economic integration in
Europe and then to wider political integration? The question is answered with the concept of
spillover, which takes two forms.

11
Firstly, functional spillover is used to explain the way in which integration in one policy area, for
example coal and steel, creates pressure for integration in further areas, such as currency
exchange rates. Secondly, political spillover is used to explain the importance of supranational
and sub-national actors in the integration process, as they create further pressure for more
integration to pursue their interests. Pressure groups and political parties are also considered to
be important actors. As a result of these processes of spillover, neo-functionalists see European
integration as a self-sustaining process which will culminate in the creation of a new polity with
its centre in Brussels (Anna, 2015).
This approach places major emphasis on the necessity of a federal organization. More than
relying on functional integration in the economic and social sectors, this form of integration
should be based on acts of political will (Bonilla, 2016). Moreover, neo-functionalism
emphasizes the role of institutions to achieve further integration. A number of extensions have
been proposed to this approach. (Haas, 1968)
2.2.3 Inter-governmentalize Approach of Economic Integration
According to Homann (1966), approach, state power must match national interest. The
orientation and velocity of regional integration is determined by the interaction of sovereign
national states. Whether the process goes forward or backward or stagnates depends on national
interests and the relative power that can be brought to bear on any specific issue (Moravcsik,
1998).
According to Sonny (2015), inter-governmentalism emphasizes the role of the nation state in
integration, and argues that the nation state is not becoming obsolete due to European
integration. Alan Milward, an inter-governmentalist writer, argued that the national governments
of the member states were the primary actors in the process of European integration, and rather
than being weakened by it as some of their sovereignty was delegated to the EU, they became
strengthened by the process. This is because in some policy areas it is in the member states'
interest to pool sovereignty. Inter-governmentalists argue that they are able to explain periods of
radical change in the EU as when the interests of the member states governments converge and
they have shared goals, and periods of slower integration as when the governments' preferences

12
diverge and they cannot agree. They continually emphasize the role of national governments and
the bargaining between them in the integration process (Sonny, 2015).
2.2.4 Liberal Inter-governmentalism Approach of Economic Integration
Liberal inter-governmentalism is a development on the intergovernmental theory of European
integration, established (Moravcsik, 1998). In the 1990s it was the dominant theory of European
integration. Like inter-governmentalism, liberal inter-governmentalism emphasizes national
governments as the key actors in the process of integration. However, it also incorporates the
liberal model of preference formation, whereby national governments have a strong idea of what
their preferences are and pursue them in bargaining with other member states. Liberal inter-
governmentalists argue that the bargaining power of member states is important in the pursuit of
integration, and package deals and side payments also occur in the process of making deals.
They see institutions as a means of creating credible commitments for member governments, that
is, as a way of making sure that other governments that they make deals with will stick to their
side of the bargain. Liberal inter-governmentalists consider supranational institutions to be of
limited importance in the integration process, in contrast to neo-functionalists (Anna, 2015).
Regionalism in Africa has also been explained within the context of the rationalist‟s theories of
neo-realism and neo-liberalism. The underlying assumption of neo-realism is that states are
dominant and are self-centered regarding issues of international relations. In relation to this,
states always want to show dominance and power when dealing with the international
community (Fairbairn, 2014).
Thus, matters relating to their interests reign supreme in any decision they make. Given that the
international system is typified by anarchy rather than hierarchy (Waltz 1954), this feature makes
states prone to conflict and competition (Söderbaum 2004b). Since a result of this, states will
obviously plan the way of achieving their independent and national interest through the
exhibition of power and sovereignty. Neorealism thus puts heavy emphasis on national interest,
security, and power politics for the emergence of regions and posits that regional integration may
be formed as a retort to such external threats (Hurrell 1995a).
In line with this, countries try to maximize their gains from any given opportunity, in addition to
considering their own security before considering that of others. With neo-realism, any attempt
to establish a form of community further than the state may aggravate conflicts among states.

13
Within this context, a wholly cooperative international community may not seem feasible
because states are more interested in relative (Cilliers, 2003).
2.3 Types of Integration
Regional Economic Integration : an agreement between groups of countries in a geographic
region, to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods,
services, and factors of production between each other. It is the process in neighboring states
enters into an agreement in order to upgrade cooperation through common institutions and rules.
Intra-regional trade focuses on economic exchange primarily between countries of the same
region or economic zone. There are five additive levels, each present in the global landscape:
Free trade, Custom union, Common market, Economic union (single market) and Political union.
The degree of economic integration: Seven stages: Preferential trading area, Free trade area,
Customs union, Common market, Economic union, Economic and monetary union and Complete
economic integration (Roberto, 2005).
 Free trade. Tariffs (a tax imposed on imported goods) between members countries are
significantly reduced, some abolished altogether. Each member country keeps its own
tariffs in regard to third countries. The general goal of free trade agreements is to develop
economies of scale and comparative advantages, which promotes economic efficiency.
 Custom union. Sets common external tariffs among member countries, implying that the
same tariffs are applied to third countries; a common trade regime is achieved. Custom
unions are particularly useful to level the competitive playing field and address the
problem of re-exports (using preferential tariffs in one country to enter another country).
 Common Market. Services and capital are free to move within member countries,
expanding scale economies and comparative advantages. However, each national market
has its own regulations such as product standards.
 Economic union (Single Market). All tariffs are removed for trade between member
countries, creating a uniform (single) market. There are also free movements of labor,
enabling workers in a member country is able to move and work in another member
country. Monetary and fiscal policies between member countries are harmonized, which
implies a level of political integration. A further step concerns a monetary union where a
common currency is used, such as with the European Union (Euro).

14
 Political union. Represents the potentially most advanced form of integration with a
common government and were the sovereignty of member country is significantly
reduced. Only found within nation states, such as federations where there is a central
government and regions having a level of autonomy (Crawford, 2005).
The establishment and the implementation of those types of socio economic integrations may
causes the removal of trade tariffs produces an immediate drop in consumer prices, which will
benefit consumers and stimulate demand. These are referred to as the static effects. There will be
increased competition among suppliers as barriers come down. Increased demand and an open
internal market also create opportunities for economies of large scale production and increased
efficiency, while larger markets encourage more investment and stimulate economic growth.
These are referred to as the dynamic effects of integration. In either case previously protected
economic activity, usually manufacturing, in one country can lose out to more efficient
producers in one of the other member countries. This is where politics enter the negotiations and
may slow down the process of integration (Crawford, 2005).
2.4 Structural Factors of Economic Integration
The structural factors of Horn of Africa socio-economic integration especial focus on Ethiopia
and Somalia has to be politically common concern of economic integration between the
countries. Therefore, if Horn of Africa particular Ethiopia and Somalia want to create socio-
economic integration there has to be common concern of politically and commitments.
According to Johannes, political will and financial means are the key drivers of integration of
which without them one cannot talk about integration. Johannes added that once the political will
is there the other drivers will follow. In support of this Kidane (2013), stated that political setting
is the foremost component foe the success of integration process. In addition, indicated that in
Africa politics is the major driver of integration. In the same time political differences ideology
is the major challenged factor for African integration in general.
According to Yitay (2017), one of the most vital elements of the integration process is
harmonization of policies. In response to this, Kendrick said that the harmonization of policies
poses a lot of challenges. Also as Biswaro mentioned the majority of the respondents agreed that
political will and other drivers of integration are pillars of a region. They are connected to each
other. Member states must harmonize their developmental policies. The harmonization of

15
policies has been done everywhere from Latin America, Europe, EAC etc. The systems have
already been developed, provided that member states render their political will or agree on the
matter. They are the ones responsible for signing the agreements and not the Secretariat. Biswaro
(2005) also support this view that nations could only integrate with their free will rather than
coercion. This contention was raised by Haas (1964) that states have to redefine their national
interest to regional perspectives based on their will.
Since usually happen that member states lack trust for each other and the integration process.
Due to lack of trust member states are not willing to do tasks that benefit the entire region.
Instead of rendering political will and commitment for the regional project, member states prefer
to construct roads that will connect them with a “trustworthy neighbour” country. The road
between Ethiopia and Sudan was constructed through bilateral agreement between the two
countries. The interconnection has been done by the countries. This shows that if member states
are committed, they will facilitate the integration process. In supporting this view, Layne (2006)
stated that member states have to forego their national interest for regional common good.
Besides, member states are also competing to get the status of hegemonic state. According to
Trevor, Ethiopia and Kenya behave like the hegemonic states of the region.
2.5 Theories of Economic Integration
Theories of economic integration has analyzed for differently According to the theory of
economic integration by Balassa (1961a), the term economic integration" refers to both a process
and a state of affairs. As a state of affairs, it is the absence of various forms of discrimination
between national economies." As a process, it includes measures designed to abolish
discrimination between economic units belonging to different national states."
Accordingly, Balassa's theory distinguishes degrees or stages of integration that are increasingly
demanding in terms of the removal of discriminatory measures: an FTA, where tariffs and quotas
are abolished against member countries but individual tariffs and quotas are retained against
third countries; a CU, which is an FTA that sets up common tariffs and quotas, if any, for trade
with nonmembers; a CM, which is a CU that abolishes non-tariff barriers to trade (product and
services markets integration) as well as restrictions on factor movement (factor market
integration); an economic union, where, besides the free circulation of products and factors of
production, member states undertake some degree of harmonization of national economic

16
policies, in order to remove discrimination that was due to disparities in these policies" (Balassa,
1961); and countercyclical policies" and the setting up of a supra-national authority whose
decisions are binding for the member states" (Balassa, 1961).
Each one of these stages has been the subject of numerous studies. Viner (1950)'s seminal work
The Customs Union Issue" is the basis for CU theory. According to Viner (1950), FTAs are
simply incomplete CUs, Balassa (1961a) notes that the only significant difference between FTAs
and CUs is the possibility of trade reflection" originating from disparities in external tariffs
among FTA members. Viner's approach, which is mostly commercial, treats CUs (and
sometimes CMs) as FTAs focusing on the removal of trade barriers. In contrast to the RTA
literature, (Balassa,1961) covers not only economic but also political matters focusing on: i) the
welfare implication of integration for the involved countries and ii) whether CUs and CMs lead
to higher levels of integration with increasingly demanding coordination of supranational
institutions and policies. Indeed, he asserts that political unions typically precede CUs and notes
that the German Zollverein, in which the CU came first, was a special case (Ibid).
Moreover, the synchronization of business cycles not only is a prerequisite for the adoption of a
common currency area but the very survival of the monetary union depends on the commonality
of business cycle fluctuations (Bergman, 2006). Business cycle synchronization may exist;
however, the cycles could have different amplitudes due to non-convergence (i.e.,
synchronization does not necessarily imply that economic convergence occurs). Indeed, while
synchronization means similar co-movements of countries' growth rates, the term convergence"
is related to the convergence hypothesis of countries' economic growth: the catch-up effect
between countries' growth rates (Crowley and Schultz, 2010).
An enormous body of empirical literature studies the business cycle synchronization degree
between countries in a region, and/or the similarity of responses to shocks within a zone in order
to evaluate regional integration initiatives. In addition, the process of economic integration, in
the sense of Balassa's stages, must be accompanied by the tightening of financial links between
countries. Indeed, the main CM feature is the free movement of factors, physical and financial
capital, labor) within a region, and thus, the establishment of a CM requires the countries of a
region to reduce their restrictions on capital movement, that is, to engage in a process of financial
integration.

17
Balassa (1961a)'s theory relates stages of integration to discrimination measures so that an
advancement through the former implies a reduction of the latter. Such a description according to
stages would seem to imply a rigid consecutive process. Nevertheless, there is no reason to
believe that an economic integration process must start with an FTA, nor that an FTA would
necessarily evolve toward higher stages (Sapir, 2011).
Additional definitions cast regionalization as a political process (political union or integration)
characterized by economic policy coordination and harmonization among member countries
(Fishlow and Haggard 1992; Dieter and Higgott 2003). However, in some situations, regionalism
can be viewed as a socio-political project with aspirations to restore past ethnic and cultural
identities and autonomies (Giordano 2000).Another manner of understanding regionalism in
Africa is defining a region. A region may be considered a cluster of countries or pieces of land
that have a comparable geographical location.
In this context, it can also be seen as units based on groups, states, or territories whose members
display some identifiable patterns of behavior (Fawcett 2004). Regionalism in Africa can also be
understood within the context of social constructivism theory, which views regionalism as a non-
material interdependence move for integration and stresses “actors‟ subjective and inter-
subjective beliefs, focusing on the social construction of collective rules and norms that guide
political behaviour” (Fjader 2012:93).
Socio economic integration comes as a result of commonly shared ideas rather than the
economics of material forces. With social constructivism, regions are shaped by the collective
perception of identities and meanings, with unclear and ever shifting boundaries (Vayrynen
2003). The formation of regions or integration of countries based on this theory is cognitive and
based on the perception of togetherness. This is the situation whereby the “feelings” or
perceptions of some identical features among countries instigate integration.
These identical features may come in the form of common culture, history, or religion (Hurrell
1995a). It has to do with the perception of regional awareness and the sentiments of
belongingness. Social constructivism pertains to a social or sociological framework, exploring
how norms and perceptions are socially built and how they become constitutive of international
cooperation and conflicts (Yi 2007).

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A typical example of regionalism established along the lines of social constructivism ideology in
Africa is the Arab Maghreb Union (AMU), which was established in 1989 in Marrakech,
Morocco. The members Algeria, Libya, Mauritania, Morocco, and Tunisia all have very strong
geographical, religious, socio-cultural, and language affinities or similarities: all are Islamic
countries where Arabic is the official language. Hanafi (2010) notes that the AMU is more
closely linked in relation to climate, landforms, population, economy, religion, language, and
history than the rest of Africa. Horn of Africa transnational ethnic is similarly with Arab
Maghreb Union.
According to Hanafi, 2010sign the union‟s objectives include: (i) the consolidation of fraternal
relations binding the member states and their peoples; (ii) the realization of progress, well-being
of their communities, and protection of their rights; (iii) the achievement of free movement of
persons, services, goods, and capital among member states; and (iv) the adoption of a common
policy in all areas and aspects of their individual states. However, member countries have not
taken advantage of their countries‟ resemblance in culture and style to agree universally on
relevant policies crucial for full integration (Ibid).
According to Sakyi(2014), Regionalism and economic integration is not necessarily the same
concept. Regionalism is a much broader concept based on political, economic, social, cultural,
and geographical demarcations; economic integration represents only its economic aspect.
Regional awareness and identity have to do with the kind of regionalism emanating from
countries within a region that share cultural, historical, traditional, religious, or economical traits
and ideologies. With this, countries are integrated based on their identities and ideas.
Regional interstate cooperation is the kind of regionalism in which different countries or
governments integrate for the rationale of maximizing economic welfare, tackling identical
internal or external challenges, and enhancing common values. To Harrell, this is a formal,
government-promoted attempt to come together to pursue issues of common interest and also
maximize gains for countries involved. State promoted regional integration involves a deliberate
and explicit plan of the governments of countries to eliminate impediments of trade and
encourage the movement of capital and people.

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2.6 Traditional Transnational Ethnic Cross-Cutting Economic Integration
Transnational Ethnic in the Horn of Africa used to have historical trade relations in bases of
community of each Ethnic or two or more Ethnic bases. Historically, this pattern of trade has
produced very low levels of informal intra-regional trade and limited scope for integration. The
establishments of economic integration in the Horn of Africa need to assess formal trade
relations between transnational Ethnic in the region particular Ethiopia and Somalia, the process
of regional economic integration suddenly appears more meaningful. There are close social and
economic ties linking people across borders and these underpin trading networks that play a vital
part in the economic life of the region and also socio-economic integration on transnational
Ethnic may play great role security and sustainable diplomatic relations specially Ethiopia and
Somalia. Cross-border trading is particularly important for sustaining pastoralist livelihoods in
Somalia, where formal trading regimes have collapsed with the demise of the state. (Sally, 2011)
According to Sally, (2011), in common with most African countries, national borders in the Horn
of Africa cut through political communities that existed before the colonial partition at the end of
the nineteenth century. The prevailing African diplomatic convention holds that colonial
boundaries should remain unchanged to avoid opening a Pandora‟s Box of competing territorial
claims. And the Sally added the new national borders that are being forged follow the former
colonial lines of partition they cut through communities just as much as the old boundaries did.
Since all of Horn of African Borders resided same Ethnic Communities it became as a result,
people who share strong social, cultural and linguistic ties continue to find themselves on either
side of national boundaries throughout the region (Sally, 2011).
For these reasons results several challenges to the Horn of Africa states such as Border Security
and goods and Livestock smuggling. There are ties of kinship and community that provided the
foundations for informal cross-border trade. Ethnic ties between communities on either side of
the border, often underpinned by hawala-finance systems, create the ideal conditions for strong
trade relationships to flourish. These communal ties are especially extensive among the pastoral
communities in the eastern Horn of Africa (Somali, Afar and Boran Oromo) and between
Tigrinya and Kunama people in Ethiopia and Eritrea (Healy, November 2011).
If transitional Ethnic communities were challenges to the Horn of Africa states it could be also
supportive tool for regional socio economic integration for the region, those have not shared only
transitional Ethnic but also shared history, culture and Religions. According to Sally, 2011 in

20
such cases, ethnic overlap in the border areas provides opportunities for rebels to cross borders to
escape government controls and facilitates cross-border supplies to sustain rebellions. The
existence of ties of community across national boundaries is both an asset and a liability. A case
has been made for borderlands themselves to be seen as resources that provide opportunities of
various kinds to those who live in them (Currey, 2010).
Social connections across borders facilitate the movement of people, goods and money that are
necessary to underpin regional economic integration. Such networks strengthen trade and can
build the foundations for close diplomatic relations between Ethiopia and Somalia. Trade and
managing trade routes play an important part in the economic life of the people in the
borderlands. Where national boundaries meet, often in places that are physically remote from
capitals and where central administration is weak, thriving social and economic networks can be
found that extend far beyond national boundaries (Ibid).
Therefore the globalization era there is no doubt that transnational Ethnic in the Horn of Africa
has its opportunities of economic integration in the Horn of Africa as well as political stability in
the Ethiopia and Somalia such as the ability of informal cross-border traders to survive and adapt
to change represents a robust resource for market-based cooperation and local economic security.
It is a resource that should be nurtured because it will, in its own way, underpin the regional
stability necessary for the success of more formal economic integration (James, 2010).
This extensive informal trade network, significant in both volume and value, shows the
possibilities inherent in future regional economic integration arrangements. In addition, the
countries of the region are bound by history and geography into relationships of economic
interdependence that lend themselves to cooperation (Ibid).
There is recognized potential for enhancing regional economic interdependence through the
development of transport corridors to sea ports, the management of shared water resources and
improved energy security. All have potential as drivers of economic integration. Until quite
recently, informal trade was viewed as a hindrance to development, but its relevance and
importance in Africa are increasingly recognized (Sally, 2011).
For example, Somali Ethnic resided Ethiopia and Somalia their border markets operating outside
the legal protection of state institutions, informal trade depends heavily on interpersonal relations
based on trust in transnational Ethnic bases. The event of conflicts or disputes arising among
traders, private social institutions (family or clan) will often settle the matter rather than referring

21
it to the courts. The prolonged collapse of the Somali state has been an important enabling factor
for informal trade. It has brought an entire national economy into the informal sector. New state
structures are emerging in parts of Somalia but there are no signs of anything resembling) a
national economic structure emerging in the near future (Ibid).
State collapse has given Somali kinship and cross-border ties renewed significance and helped
to revitalize a livestock economy that builds on older patterns of economic exchange with
histories of their own. It has also created considerable insecurity along the borders between
Somalia and its neighbors. Informal traders, employing the local knowledge and flexibility that
are their hallmark, have been better able to cope with the prevailing uncertainties and circumvent
the problems (Sally, 2011).
2.7 Contemporary Economic Integration
The analysis of contemporary economic integration review in Africa, the motive of regionalism
and economic integration in Africa is for its countries to come together to achieve large markets
for themselves, reap the benefits of economies of scale, and attain a coherent political
cooperation. These benefits notwithstanding, regionalism and economic integration in Africa has
often been plagued with several challenges, which include transportation and mobility of factors
of production, multi-memberships and duplication of programs and procedures, minimal intra-
regional trade, macroeconomic divergence, and conflicts (Daniel, 2014).
The concept of regionalism has considerable resonance in the African continent, both in the
rhetoric of African unity and as a preferred vehicle for economic development. But the
environment for attaining regional integration is challenging because state structures are weak
and Africa‟s political leaders cling to the most conservative principles of statehood and
sovereignty. At the same time they routinely commit themselves to achieving regional economic
integration as a „collective development and transformation strategy (AfDB, 2010).
Designed to accelerate development and end Africa‟s economic marginalization within the
global economy. Africa is increasingly focusing on regional integration as a strategy for
achieving sustainable economic growth as there is a consensus that by merging its economies
and pooling its capacities, endowments and energies, the continent can overcome its daunting
development challenges (UNECA, 2010).

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The issue of transportation is imperative to the smooth functioning of regionalism and economic
integration, as with integrated economies, people have to be able to move easily from one place
(economy) to the other, with no structural impediments. A developed transport system is
necessary for economies to operate efficiently, enhancing trade by minimizing cost and time of
moving people and goods to where there are jobs and markets (Joseph, 2011).
The Market indicates that improvement of a region‟s transportation system is an ultimate priority
for regionalism and economic integration. However, the landlocked status of some African
countries, bureaucracy, high insurance costs, difficult Customs arrangements, bribery and
corruption, and poor transport infrastructure, among others, account for the continent‟s high
transportation costs (Abuka 2005).
So severe is the problem that the costs of transportation in Africa impede trade more than import
tariffs do. (Amjadi, 1995) At times, it is even cheaper to transport things outside the region, even
to as far as Asia, than to transport into the region. A scenario is given by the ECA (2004):
shipping a car from Japan to Abidjan cost only US$ 1,500, and shipping that same car from
Addis Ababa to Abidjan could cost US$ 5,000. At some point in time, traveling from New York
to Amsterdam costs US$ 164, relative to US$ 395 from Abuja to Bamako, which is a shorter
distance (Njoh 2008).
Another key feature of transportation in Africa is the underdeveloped nature of the transport
system linking countries. Many road, air, and rail systems in African countries are unconnected
(ECA 2004). A survey by KPMG (2013) indicates that only Morocco, Tunisia, Egypt, Namibia,
South Africa, and Swaziland have better rail systems than the world average, and only 11
African countries have road systems that rate above the world average. Air transport in Africa is
also very limited. As KPMG (2013a) notes, an estimated 62 million passengers travelled by air
within Africa during 2010, compared with the 457 million that travelled by air within Europe the
same year (Daniel Sakyi, 2014).
It is important to note that an efficient transportation system will effectively link suppliers to
consumers of a variety of goods and also labor to employers (ILO 2006; Ondiege, 2013).The
transportation system can, if efficient, guarantee the safety of both goods and people crossing
borders as well as the movement of workers to and from work. This notwithstanding, the
transportation system in Africa is not as efficient as it should be. Barka (2012), for example,
points out those delays, corruption and multiple border entry checkpoints often characterize the

23
transportation system in Africa. This also accounts significantly for the high transportation cost,
which ultimately results in a lower volume of goods crossing borders and scares off potential and
prudent investors who want to do business in Africa.
According to the AfDB (2010), these transportation problems in Africa result in lower intra-
African trade. Although some regional blocs in Africa have made it their prerogative to aid the
free movement of goods and factors of production as part of their treaties, the high transportation
cost and bureaucracy at the border points of entry makes it difficult to cross their home borders.
For instance, though there is supposed to be easy movement of ECOWAS members within the
region, people do face a lot of challenges in trying to cross borders beyond their home countries.
This is all as a result of lack of enforcement of the policies and regulations put forward by these
regional communities. According to Adepoju (2002), it is therefore important for countries to go
a step further by aligning their domestic laws with regional treaties to deal with factors that are
inhibiting the free movement of goods and factors of production, such as strict employment laws
that make it difficult for labor to seek employment in other foreign member countries (Daniel
Sakyi, 2014).
The challenge of transportation infrastructure faced in Africa (and most especially sub-Saharan
Africa) is a result of various governments‟ making little or no effort to improve the transport
system (Njoh 2008; Olievschi 2013). Undue delays created in the course of transportation also
act to impede the smooth transit of people and goods across countries. The Customs service
sometimes creates unnecessary delays at the airports, borders, and ports making transportation in
Africa cumbersome. In Ghana, for example, it is more difficult and time consuming to export or
import goods to or from an African country than to engage in foreign trade with countries in
Europe (Daniel Sakyi, 2014).
Minimal intra-regional trade continues to be a challenge to regionalism and economic integration
in Africa. Trade among countries in regional and economic groups is relevant to the development
of the region. Intra-regional trade contributes positively to the widening of the markets; has a
high capacity of creating jobs and speeding investment and growth; and has the ability to
position countries to take advantage of even greater trade with countries outside the region.
Moreover, increased trade within regional and economic groups in Africa has the potential to
develop its communication infrastructure, transportation, and financial market, as these are
essential for smooth trade. Despite these potential benefits, African countries have not made

24
enough efforts to enhance intra-regional trade (UNCTAD 2013). Poor transport infrastructure
and limited access to finance to support trade have often been cited as hampering intra-African
trade (Longo and Khalid 2001). African leaders have over-concentrated on the removal of trade
barriers at the expense of developing productive capacity that will enhance trade and have also
neglected Africa‟s private sector in integration initiatives and efforts (UNCTAD, 2013).
In spite of the multiple challenges to regionalism and economic integration in Africa, there exist
numerous opportunities and avenues that the continent could exploit to form a united Africa to
its advantage. It has been the hope of many economists and policymakers that a united Africa
will offer more opportunities to Africans in terms of growth and development compared with the
solo efforts of individual countries. According to Olubomehin and Kwawonishe (2004),
integration is not just about political decorum, but rather is an inevitable strategy of survival and
development. Countries thus adopt regionalism and economic integration for motives that are
rooted in economic, political, and socio-cultural gains. Indeed, gains exist in a number of areas
and sectors, particularly the power and energy sectors, the manufacturing sector, and in public
private partnerships.
It is important to note that coordination and collaboration in the energy sector will help mitigate
the power crisis that has been the bane of many African countries, particularly those in sub-
Saharan Africa. Indeed, potential exists in and North Africa for power and energy generation
(Stenzel and Sara, 2013).Further they state that significant benefits could be amassed from the
development of the power and energy markets on a regional basis. This is a possibility because
linking national petroleum and electricity industries can help mobilize private and domestic
investments by the expansion of the market size for power and energy in Africa (Daniel Sakyi,
2014).
2.8 Empirical Review of the Study
According to Brücher, 2016, although arguments predicting a weak response of the trade flow to
(further) initiatives in the area of regionalism in general and South-South integration in particular
cannot be brushed away, they certainly have to be qualified. African RECs are indeed rather
small, they are made up of poor, little diversified and rather similar economies, and large parts of
Africa are already relatively liberalized. African regions are not as small, homogenous and
informal economies dominated as commonly assumed. But when it comes to Horn of Africa
there are some factors that may support Horn of Africa socio economic integration such as

25
geographical location of the region, the distances between states that may be easier to build an
infrastructure rather whole Africa. The improvement of the regional infrastructure is in most
cases one of the priority areas of the regional schemes themselves and attempts at conflating and
harmonizing existing smaller schemes are a specific response to the small size of the schemes in
economic terms. The argument about heterogeneity likewise has to be significantly adjusted as
heterogeneity in general may be only of secondary importance for several aspects(Seid, 2013).
Similarity may have not only negative corollaries but also its virtues while differences also entail
impediments for certain processes, and African RECs are distinctly more diverse than commonly
assumed. Still, the problem of lacking diversity prevails. (Yeats, 1999) Particularly the almost
complete absence of economies in the upper areas of the global distribution with regard to capital
and skills is a serious threat to the success of African RECs and other agreements of the South-
South type. In this context, it is probably more appropriate to point not only to the small degree
of differences across countries, but rather to the relatively low production and export diversity
inside most of the African economies: only few African countries export merely half of the
potential product lines at a very high aggregated (three digit) level (Ibid).
As always argued has challenged institutional weakness as Yeats explains here, the case of
institutional weakness is comparatively easy to assess. Admittedly, capacity constraints inside
the regional bodies still are an obstacle, but finances and human resources continuously improve
due to support from bilateral and multilateral donors and commitments of member countries.
Still, regional secretariats themselves and other multi-national African bodies strongly stress
their own institutional weakness as major impediment to the implementation of regional schemes
(Ibid).
In all cases, strict Rules of Origin may prevent trade deflection but this requires complicated and
expensive administrative efforts by the state bureaucracy and the traders and often comes at the
expense of sensible division of labour in the region. Despite the prominence and plausibility of
this argument, the problem of multiple and overlapping memberships appears to be of secondary
importance on a closer view. The depictions often only insufficiently distinguish between
different kinds of regional schemes. Several of the agreements serve other purposes than regional
liberalization of markets (most prominently securing peace, combating natural disasters and
managing natural resources as well as cooperation on several other issues) (Brücher, Jun 2016).

26
Hence, to maintain the metaphor, not all noodles are spaghetti. Although in several of the other
purpose agreements cooperation in issues relating to business and economics is included, reality
shows that this is either mere diplomatic rhetoric or centers on very specific areas only (e.g.
fisheries, tourism, and water management). There are neither specific tariff cuts and trade and
investment facilitation efforts nor other deep economic integration initiatives attached to these
agreements. This applies for example to the Intergovernmental Authority on Development
(IGAD, 2016).
The horn of Africa leadership has differently plan to development accommodation on regional
level since then the countries of the Horn of Africa have been specializing on their comparative
advantages, one of the classical factors for regional integration. (Solomon, 2016) For example,
while Djibouti has been upgrading and expanding its port, mainly, to accommodate Ethiopia‟s
increasingly growing economy, Ethiopia has been investing hugely on energy and is now
exporting electricity to Djibouti, Sudan and Kenya. Generally, “Ethiopia boasts a regional
comparative advantage, ecologically and economically, in hydropower and has the potential to
generate up to 45,000 megawatts of electricity” (Verhoeven, 2011).
According to Solomon, (2016), most importantly, in the last decade or so, the IGAD region has
been a host to countries registering huge economic successes in Africa. Perhaps the most notable
example in this regard is Ethiopia, whose average economic growth in the last decade (2002/3-
2012/13) was 10.8%. This is twice the average economic growth of Sub-Sahara Africa, which
was 5.3% (UNDP, 2014). Specifically, the region is endowed with rivers, lakes, forests,
livestock, and high agricultural potential, including untapped potential of petroleum, gold, salt,
hydro-power and natural gas. The Horn is also a region of diverse ethnicity, languages, and
religious practices. It is a region where two of the world‟s major religions- Christianity and Islam
have co-existed peacefully for generations (Sisay, 2006).
The Horn of Africa leadership have been taken a various initiatives and activities designed to
lead into regional integration in the Horn of Africa. The initiatives activities of Horn of Africa
can be mainly, grouped into three categories. According to Solomon, 2016, the first one
constitutes a regional integration arrangement that involves countries of the Horn of Africa and
other countries located beyond that region within the African continent. Here, we are referring to
COMESA, a regional integration arrangement that involves member states from the Horn of
Africa and beyond. The second one is a regional integration arrangement whose member states

27
are exclusively from countries of the Horn of Africa, that is, the IGAD. The third one involves
bilateral agreements adopted to facilitate the path of regional integration in the region.
2.9 Conceptual Framework of the Study
Despite thorough analysis of regional integration, its definition remains controversial. According
to Andrea (2016), regional integration is an extremely complex notion because of its
multidimensional and dynamic nature. On the one hand, the study of regional integration issues
draws together several interrelated branches of knowledge: economics, politics, sociology,
governance, and international relations, among others (Ibid). Thus, it is difficult to achieve a
general definition. For instance, the terms "regional integration" and "economic integration" or
"regional economic integration" are used commonly as synonyms in spite of the importance
accorded to non-economic factors of integration, particularly to political ones further describes
the political, economic link of regional integration. On the other hand, all regional integration
experiences (in Europe, Asia, Africa, and America) are ongoing processes (Balassa, 1961).
To differentiate between economic integration as a process and as a state, as no group of
countries has proved to be integrated in the sense of state, it is correct to arm that regional
integration is ongoing. Because theory evolves hand in hand with these experiences, the
conceptualization of regional integration is still under construction. Up to now, although the
European regional integration attempt has been studied the most, a rich number of paradigms
developed to understand how it works, functionalism and neo-functionalism, inter-
governmentalism, institutionalism, constructivism, post-modernism (Ibid).
Similarly, Goertz and Powers (2011) describe regional integration arrangements based on four
essential characteristics: (i) regional (the presence of contiguous States), (ii) having a set of
legally binding treaties that constitute the institution, (iii) involving economic cooperation, and
(iv) other multiple issues. The same authors also identify the following five core morphological
characteristics of regional integration arrangements (that vary over time and space): (i) rule and
policy making system of the Council of Minster type, (ii) a dispute settlement mechanism, (iii)
international legal personality (iv), The Secretaryand (v) parliamentary organization. Thus,
regional integration arrangements have institutional and organizational components. It is
institutional because it is constituted by legally binding documents which constitute the rules,
norms, and principles of the institution (Gebru, 2016).

28
Neo-functionalist approaches do not only provide an explanation for progressing social, political
and economic integration by societal demand. Regional integration is also a means to overcome
the resistance of national governments against the delegation of policies and political authority in
the areas of defense and war, currency and domestic law and order, which lie at core of state
sovereignty (Haas, 1967).
The link between economic, political and security integration is the so-called “functional spill-
over” (Haas, 1958). Neo-functionalist approach explains the gap between internal and external
security integration. The European Union is a prime example of how economic integration
fosters political and security integration among states that engage in mutual economic exchange.
Weak states, in particular, should be more inclined to engage in “regimeboosting integration”
(Söderbaum, 2004) because they are more dependent on economic growth to forge domestic
stability, tackle societal problems, and strengthen their international standing in terms of
bargaining power and legitimacy (Aschhoff, 2012).Moreover, non-state actors can more easily
circumvent their governments in seeking transnational exchange (Bach 2005). Yet, states must
not be too weak either political instability can be a major obstacle to integration (Edi 2007).

29
CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Introduction
This chapter has discusses the method and procedures that were applied in collecting and
analyzing the data and the general approaches that were used for conducting this study. It covers
the research design, population, sampling technique, sources and types of the data be gathered,
techniques for data collection and the instruments of the study that was illustrated the validity
and reliability were ensured followed by a summary of the chapter.
3.2 Research Approaches and Design
The research has addressed in qualitative methods of data collection, data analysis has been
applied to effective respond to the research questions as the nature of the issue under study
involves describing and contextualizing for horn of Africa economic integration particular Ethiopia
and Somalia. Thus the research used descriptive research design. Accordingly the study considered
the levels of regional integration process in African in general and thereby indicating the level
and process in Horn of Africa in particular in order to explain the interactions of regional actors
and the resulting variations. In this process, the cooperation culture materializing through
regional initiatives will be considered as an emergent reality in a continuous state of construction
and reconstruction which can sustain the promotion of a collective identity needed to deepen
regional integration.
3.3 Population
Population refers to the total of items about which information is desired (Kothari,
2004).Therefore, the total of the population that conducted this research were Diplomats other
government officials, academician, Merchants, investors Elders and Students who have
knowledge and experience about Socio-Economic integration and the transnational Ethnic role in

30
the Horn of Africa specially Ethiopia and Somalia will be the respondents of the study with the
duration of 45 days in both countries.
3.4 Sample Frame and Sampling Techniques
Concerning sampling technique, the study will be used both probability of this sampling
techniques. The probability sampling has been proportional simple random sampling in which
every member of the community those have an idea on the issue will have the same chance of
being included in the sample because each and everyone have his/her special knowledge and
experience that may concern the issue. Here, all employees in each department had equal chance
to be included in the sample. In addition, a purposive sampling technique have been employed
for selecting interviewees based on their position such as concerned Politian and Diplomats
Academicians and Business persons of these two countries of Ethiopia and Somalia have been
chosen for interview as they relatively do have better information emanate from their position.
3.5 Source of Data
Primary Data Sources: Data sources of the research will be the concerned Diplomats of these
two countries of Ethiopia and Somalia such as Foreign Ministry Federal Democratic Republic of
Ethiopia Chamber of Commerce and Sectorial Association, Embassy of Somalia as well as other
concerned important people. These include top diplomats at different levels, middle and
academicians merchants, and other business people of these countries who I have realized that
they have Business interest on this root.
Secondary Data Resources: Secondary data will be used in addition to primary data. The
secondary have been collected from different websites, journals; other published books, sources
that related to the transnational Ethnic and Horn of Africa economic integrations. The sources
also comprises ECA, AU and the countries statistical and other reports, proceedings, MoU,
bilateral and multilateral agreements etc.
3.6 Sample Size Determination

31
To determine the overall sample, Kothari formula has been utilized based upon the standard
statistical approaches indicated below. According to Kothari (2004) first of all, we have to
specify the precision and the confidence level and then work out the following formula.
The people participated, the interview were heads of departments‟ and general directors
Diplomats, Merchants, Investors and employees have been randomly selected from these two
countries concerned persons through direct phone calls and Emails due to the reason of Covid 19
lockdown, therefore the most of the answers have received by Emails while some of the
interviews were phone calls. Though, the study population has a lot of homogenizing factors
specially on the Border Areas resided and were same Ethnic group, which was why I have
chosen the transnational Ethnic role on the socio-economic integration between Ethiopia and
Somalia, there were also other different Ethnic groups in the different departments of Ministry of
Foreign Affairs of Ethiopia and also different number of Merchants and investors those have
divergence in terms of their interest and view to the issue. In other words, to account for that
difference probability proportional random samplings were employed.
Furthermore, purposively will be selected important number of persons that from these two
countries of Ethiopia and Somalia such Directors and Diplomats have been interviewed as they
involved and may know the opportunities and challenges of Horn of Africa economic
integration.
3.7 Data Collection Tools
Primary Data Collection Tools
Methods a number of data collections methods were used of this study interview questions to
obtain the respondents opinions and beliefs about the study at hand. The interview question has
been prepared and managed to collect a wide range of the data in related to transnational Ethnic
on socio-economic integration of the Ethiopia and Somalia. The interview question were
Structured to benefit quite large area. For this purpose, the interviewers estimated distributions of
enough data were expected.
Interview
Also interviews were used. Interviews are personal and unstructured interviews, whose aim is to
identify participant‟s emotions, feelings, and opinions regarding a particular research subject.

32
The main advantage of personal interviews will involve personal direct contact between
interviewers and interviewees, as well as non-response rates are eliminated, but interviewers
need to have developed the necessary skills to successfully carry an interview.
It has been conducted from the concerned diplomats of these two countries of Ethiopia and
Somalia such as Foreign Ministry Federal Democratic Republic of Ethiopia and Embassy of
Somalia. The interviews were Emails and phone calls which both the questions were clear. It
helps to gather important data related analyzing challenges and opportunities of socio-economic
integration between these countries. This tool it is also able to get more relevant and important
suggestion for recommendation. In the course of the interview, the researcher managed the time
for each question and made clear purposes of questions that easily understandable through the
working hard and the interviewees.
3.8 Data Analysis
In this research, statistical and arithmetic percentage comparison method of data analysis will be
used. The study will try to be specific and state what variables are included in the analyses and
identified the dependent and independent variables if such a relationship exists.
3.9 Ethical Consideration
To commence the research the essential endorsement and permission was obtained from the
Ethiopian Civil Service University; Foreign Ministry of Federal Democratic Republic of
Ethiopia and Embassies of Federal Democratic Republic of Somalia. Arrangements to protect
research participants from harm have been considered in advance, in addition to that,
respondents has been informed regarding the purpose of the study, how the data was used, and
what participation were required of them and how much time is required, then their informed
consent have been demanded. Furthermore, confidentiality of the respondents were insured by
avoiding the attribution of comments, in reports or presentations, to identified participants and
instead of real naming fake names have been used and any harm to them were avoided by
operating with honesty and integrity.

33
Chapter Four
Data Analysis and Interpretation
4.1 Introduction:
The smaller Horn of Africa, which shares culture, religion and people has an ambition of socio-
economic integration led by the Prime Minister of Ethiopia, Abiy Ahmed who proposed an idea
and efforts of socio-economic integration between the smaller Horn of Africa states, that united,
Ethiopia, Somalia, Eritrea and Djibouti, even though Djibouti did not attend the Joint Declaration
Done in Asmara, September 5, 2018 by the leaders of Ethiopia, Somalia and Eritrea for the
discussions of Horn of Africa socio-economic integration ambition.
The smaller of the Horn of Africa to have Socio-economic integration it is aimed to prevent the
conflict and disputes of the region, and brought a solution for the unemployment of the region
and economic recession that known the region, therefore it is expected the region to have socio-
economic integration would be able to change the previous picture and may create a condition
can lead the region economy grow and Jobs creation.
This research focused on the smaller Horn of Arica those shares transitional ethnic that always
be the causes the ongoing conflicts and civil strife between the Horn of Africa instead to became
the connector the region in the brotherhood solidarity way, even though after the region
established the ambition of socio-economic integration transnational ethnic of the region is
expected to be the connector of the region. In particular, Somalia and Ethiopia those are
struggling with insecurity and the economy recession.
Therefore, the research were focused on socio-economic relations between Ethiopia and Somalia
and positive role of transnational ethnic and its contribution and providing of lasting stability
between the two countries and which enable the economic growth and Job creation for the two
countries.
To be transformed a stability and lasting peace between these two countries as well as economic
co-operation led by Ethiopian Somali shares linguistic and religious values with Somali Somalia
and the research trying to provide how Ethiopia Somali could benefit the socio-economic

34
integration between Ethiopia and Somalia and how they can play a role in the lasting resolution
between Ethiopia and Somalia.
4.2. The political role on Socio-economic integration between Ethio-Somalia
The research has looked back at the previous diplomatic relation history of Ethiopia and Somalia
regimes where there was no socio-economic integration or people to people relationship, then the
research has found that the both communities are now very much happy for the creation of the
socio-economic integration, which both community parties see as a neglected opportunity by the
previous leadership of both countries. Those instead of bringing the society closer together and
creating an economic opportunities, involved conflict that has cost many lives and property.
Research shows that when you look at the opinions of the two countries 'society. You may find
that the two countries' society is very interested to have socio-economic integration. Which both
sides see it as an economic opportunity for both countries.
Ethiopia and Somalia to have socio-economic integration therefore the establishment and the
implementation, the Diplomats have a very crucial role on this regard, first, by providing
suggestions, undertaking survey, identifying challenges and finally pointing the socioeconomic
integration benefits for mutual benefit are some of the basic factors that can be done by
diplomats.
According to Harun Maruf,2018, New Ethiopian Prime Minister Abiy Ahmed and Somali
President Mohamed Abdullahi "Farmajo" Mohamed agreed Saturday to "strengthen their
brotherly bilateral relations" and to collaborate with the African Union in seeking solutions to
problems on the continent. (Maruf,2018)
According to, Martin Plaut, (2018), on a visit to Mogadishu on Friday 16 June, 2018 Ethiopian
Prime Minister Abiy Ahmed revealed his vision for the whole of the Horn of Africa. Prime
Minister Abiy said his vision included: “a common trade area where people, ideas, goods and
products move freely across borders. It‟s a future where we work to enlarge opportunities for our
people and work for economic security that gives our children and grandchildren great hope
(Martin Plaut, 2018).
Abiy Ahmed prime Minister of Ethiopia‟s visit to Mogadishu 16 Jun 2018 was the starting point
of Ethiopia and Somalia bilateral agreement of socio-economic integration, even though latter on
the initiative became smaller Horn of Africa or particular Ethiopia, Somalia and Eritrea. The

35
Prime Minister of Ethiopia, Abiy Ahmed, said “It is a future where we abolish trade barriers. It is
a future where we will create a single market in our region. It is a future where we stimulate
more products, more production, innovation and more private enterprise, both here in Mogadishu
and in Addis Ababa” (Ibid).
After bilateral talks Saturday in the Somali capital, Mogadishu, the leaders said in a statement
the two countries would enhance diplomatic and trade activities, including opening diplomatic
and consular offices and removing of "all trade and economic barriers." (Harun, 2018) The most
important agenda of the leaders was to agree by literal agreement of an economic collaboration
between Ethiopia and Somalia, the leaders paid "singular focus" to economic growth and
bilateral investment to "secure a prosperous future for their people, the countries of the Horn of
Africa and ultimately the African continent" (Ibid) .
Although there was an ambitious plan for IGAD countries to have socio-economic integration,
while Prime Minister Abiy Ahmed came to power accelerated the development of stability of the
Horn of Africa immediately the Prime Minister has started the implementation of the Algiers
peace agreement between Ethiopia and Eritrea, as well has initiated socio-economic integration
of the smaller Horn of Africa particular Ethiopia, Somalia and Eritrea and these countries leaders
their first meeting in Asmara have agreed to have collaboration.
Anyway, Ethiopia can play its part to establish economic interdependence in the region through
bilateral means and within the framework of IGAD. Infrastructure development to connect with
countries in the region including Somalia, need to be given priority, Ethiopia is working in this
regard to connect with neighboring countries through road and railway. It should be further
expanded. Ethiopia in cooperation with other IGAD members should also work to find ways of
strengthening trade relations in the region - an essential factor for economic integration. There
need for Ethiopia to strengthen this initiative bilaterally and through IGAD.
The minister of trade of Puntland state of Somalia has said the Custom of Turdibi that between
Ethiopia and Puntland State of Somalia is part of by literal agreement between Ethiopia and
Somalia and now on board to implement the trade agreement on by literal that has already been
signed.
Ethiopia government plays the lion‟s share the Horn of Africa cooperation. On the other hand
Ethiopia is the second populated country in Africa which nominates Ethiopia to be hegemony
country in the Horn of Africa. There are different perspectives on regional hegemony. Some

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