Somalia cuts diplomatic ties with Kenya

In a surprising move, Somalia announced that it is cutting diplomatic ties with Kenya, citing violations of Somali sovereignty and interference in internal affairs. The decision came just a day after Kenyan President Uhuru Kenyatta hosted Musa Bihi Abdi, the leader of Somaliland, in Nairobi. This development has raised concerns about the impact on the economies of both countries and the region as a whole. Speaking to CNBC Africa, Solomon Kariuki, an Investment Analyst at Cytonn, shed light on the potential implications of this rift. Kariuki highlighted the economic consequences of the severed ties, particularly in the trade of khat, a highly perishable product. He estimated that the closure of the border could result in a daily loss of around 10 to 15 billion in terms of Miraa exports from Kenya to Somalia. Moreover, with Somalia cutting off ties with Kenya, it opens up opportunities for other countries in the region to benefit from the disruption. Kariuki noted that Ethiopia could capitalize on this situation by increasing its exports to Somalia. This could potentially deepen economic ties between Ethiopia and Somalia, creating a new dynamic in the region's trade landscape. The rift between Somalia and Kenya also has ramifications for the blue economy, as the two countries are engaged in a maritime dispute that affects their territorial waters and resource rights. Kariuki expressed skepticism about a quick resolution to the maritime dispute, suggesting that the case could drag on for several years. However, he believed that President Kenyatta should strive to maintain positive relations with both Somalia and Somaliland, even as tensions simmer between the neighboring nations. As the situation unfolds, it remains uncertain how the diplomatic fallout will shape the economic landscape of East Africa. The decision to sever ties underscores the complex web of political and economic interests at play in the region, with ripple effects that could extend beyond Somalia and Kenya.