On 1 January 2024, Ethiopia and Somaliland signed a landmark agreement granting Ethiopia access to the Red Sea through a 20-kilometer strip of Somaliland coastline, enabling the construction of a naval base for 50 years. In return, Somaliland is set to receive shares in Ethiopian Airlines and formal recognition as an independent state. This deal aims to alleviate Ethiopia's reliance on the Port of Djibouti, which handles 95% of its trade but presents logistical and cost challenges.

Several international players are competing to finance projects in African countries, and New Delhi will be at a disadvantage if it does not proactively engage in strengthening development partnerships. As an emerging power that is actively pushing South-South Cooperation (SSC), India has to convince its partners the advantage of Indian development assistance, which adheres to principles of horizontal cooperation and mutual benefit.