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Old May 3rd, 2017, 09:27 AM   #361
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It was no accident that James “Mad Dog” Mattis made Djibouti one of his first overseas trips as US Secretary of Defence, this tiny African country on the Horn of Africa is home to the USA’s only African military base, a significant hub for the ongoing fight against terrorism across Africa and the Middle East. Djibouti also hosts French and Japanese bases and will soon house China’s first overseas military logistics centre.

Many countries are described as strategically located, which often a cliché, but in Djibouti’s’ case it is true as it guards the Bab el Mandeb Strait at the entrance to the Red Sea where much of the world’s shipping traffic passes. Djibouti City which houses much of the nation’s population is a lively trading entrepôt terming with merchants and traders from Africa, the Gulf and beyond as well as soldiers, sailors and spies on account of the number of military bases there. According to the Djiboutian government the Russians also requested permission to build a base in the country something which the authorities are currently considering.

In this spirit the country has declared itself open for business; foreign investment is encouraged and foreigners are given (in theory at least) the same rights as locals in terms of property. The Djiboutian Franc is pegged to the dollar giving a degree of foreign currency stability not enjoyed by other African currencies. The nation’s lack of natural resources bar its location means that it has been forced to look elsewhere to make a living.

There are noises about Djibouti becoming the next Dubai, which is seems a bit fanciful right now but the country has attracted much attention and funding from the Emirate including the building of luxury complex the US$400 million Palace Djibouti Hotel. In the long term in order to emulate Dubai the Djiboutian government are focusing on the three “Ts”; namely Trade, Transport and Tourism.

Transport is an obvious sector as Djibouti is the link to the sea for landlocked Ethiopian trade, its proximity to busy shipping lanes also make it an obvious logistics hub for passing container traffic. Chinese companies have featured heavily in the development of transport links building the new rail line to Addis Ababa and the new Dorelah port which has massively increased the nation’s port capacity.

The country is also encouraging light manufacturing centres which can complement neighbouring Ethiopia’s industrial drive. To help this ambition Chinese firm Dalian Port Corporation just started construction work on a what will be Africa’s biggest free trade zone and will house numerous manufacturing facilities.

Tourism is less obvious but the government are planning to make the country a eco-tourism destination and could expect to attract tourists from the Gulf region, the wider Middle East and even Europe. The country features the world’s saltiest lake, active volcanos and excellent scuba diving.

All this make Djibouti an idea place to set up a regional logistics firm, eco-tourism centre for visitors from the Gulf or some kind of manufacturing facility, perhaps for goods started in Ethiopia and completed in Djibouti.

Overall Djibouti’s economic performance has been good of late with GDP growth of 7% in 2016 which indicate that the country is at least moving in the right direction.

However despite these positives Djibouti has major weaknesses, it is highly dependent on Ethiopian trade and despite the government’s recent efforts and it’s high economic growth rate, corruption, inequality, poverty and poor infrastructure are a facts of life for the country. It also faces a tough neighbourhood, Somalia, South Sudan, Yemen are all close by and have all suffered major political and security issues or indeed outright war.

A Chinese military base is being constructed to help combat security and fight piracy, or at least that’s the official version, the Chinese have been playing down the significance of the base for political reasons but it a sure sign that China is moving to a new strategy of “active defence”. The four military bases should in theory provide Djibouti with a degree of stability as any attack on the country would upset four major powers.

The Chinese funded Djibouti to Addis Ababa rail line is perhaps the project most critical to the country’s success, originally built by the French it has recently been refurbished by Chinese firms, who have also been busy with other rail lines in East Africa as well. The new line will cut journey times between Addis to Djibouti to ten hours from three days and cut costs by a third, all of which should boost traffic and ultimately both nations’ economies.
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Old May 3rd, 2017, 09:35 AM   #362
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JEDDAH: The International Islamic Trade Finance Corporation (ITFC) and the International Trade Center (ITC) signed an agreement to develop two new projects in Djibouti and Algeria under the Aid for Trade Initiative for the Arab States (AfTIAS) program.

The signing ceremony was held during the visit of Archana Gonzalez, executive director of the ITC, to the Islamic Development Bank (IDB) headquarters in Jeddah where she met Bandar M.H. Hajjar, IDB president and ITFC CEO Hani Salem Sonbol.

“This agreement is an amendment of our ongoing relationship to include two more projects that were not initially covered…” Gonzalez told Arab News.
She said that ITC and ITFC wanted to work closely with the IDB to help it utilize its true potential.

The project seeks to promote Djibouti’s handicrafts by linking it to the tourism sector.

This project will lead to the diversification of the sources of income and will help consolidate the craft sector by providing appropriate tools, a regulatory framework and the required infrastructure.

Sonbol said that the establishment of Djibouti Handicrafts Export Village would assist the government to promote local handicrafts and generate a new strategic focus for tourism.

He said that the ITC and the ITFC sought the promotion of small and medium enterprises (SMEs) and their integration into global and regional economies.
The ITFC chief lamented the “underrepresentation” of the SMEs in the economy despite the key role these enterprises could play in the generation of jobs for the youth and the womenfolk of any country.
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Old September 3rd, 2017, 02:41 PM   #363
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The U.S. Agency for International Development (USAID) has selected the Education Development Center (EDC) to lead a $24.5 million, five-year workforce development program in the Republic of Djibouti in the Horn of Africa. EDC will work with partners Cardno Emerging Markets, Souktel, and TIG to reduce unemployment in Djibouti, which is estimated at nearly 60 percent.

The consortium will focus on preparing youth with skills and training based on the needs of local businesses and industries. The project’s goal is to reach between 30,000 and 40,000 young adults with job training, work-based learning opportunities, and employment center services.

Key areas of focus include strengthening the links between technical and vocational education and training (TVET) providers and private sector businesses by improving communication and collaboration, updating education and training curricula--and providing work-based learning, counseling, and job placement.

“We are thankful to USAID and excited to apply our long experience in workforce development to this new initiative,” said EDC’s Erik Butler. “Having worked in the region for many years on preparing youth for productive livelihoods, we are enormously pleased to expand our efforts to Djibouti.”

The project will include development of an online platform which will establish referral networks, serve as a clearing house of employment information, facilitate counseling, job-matching, and referrals, and provide a space for youth to create employee profiles to match with private sector jobs.

“We’re honored to support EDC on this crucial project,” added Souktel CEO Jacob Korenblum. “Building digital employability platforms has been a key focus of our work for close to a decade. We’re excited to draw on our past partnerships with EDC across East Africa—from Rwanda to Somali communities—and launch new solutions that help youth get better access to work and training.”
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Old September 8th, 2017, 12:40 AM   #364
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Les autorités djiboutiennes ont approuvé ce 4 septembre la ratification de l'accord sur la facilitation des échanges en vigueur depuis février 2017 dans le monde. Porté par l'Organisation mondiale pour le commerce, cet instrument permet au pays de bénéficier de certains avantages qui feront accroître ses recettes.

L'Etat djiboutien compte profiter au maximum des mécanismes internationaux pour améliorer ses recettes. Les autorités du pays viennent d'approuver la ratification de l'Accord sur la facilitation des échanges de l'Organisation mondiale du commerce (OMC). Entré en vigueur en février 2017, il s'agit d'un mécanisme international qui prévoit la simplification et l'harmonisation des procédures internationales en matière de commerce, de même que l'activité, les pratiques et les formalités utilisées pour collecter, présenter et diffuser les informations relatives à l'exportation et l'importation.

Selon le ministre djiboutien des Affaires étrangères et porte-parole du gouvernement, Mahmoud Ali, l'adoption de ce texte va ouvrir d'autres portes aux pays avec plusieurs avantages à la clé. Djibouti bénéficiera de la diminution des coûts de transports et transit et connaîtra l'accroissement des recettes fiscales et l'attraction des investissements étrangers.

L'accord en question comporte des dispositions qui permettent d'accélérer le flux et le dédouanement des marchandises de tout genre, même celles en transit. Il prévoit aussi un renforcement et une effectivité de la coopération entre les douanes et les autres autorités qualifiées sur les questions de facilitation des échanges et du respect des procédures douanières, de même que l'assistance technique et le renforcement des capacités.

Coût du commerce réduit pour les pays pauvres

L'Accord sur la facilitation des échanges de l'OMC est un mécanisme qui porte plusieurs avantages pour les pays pauvres. «L'Accord sur la facilitation des échanges est le premier accord commercial multilatéral conclu depuis l'établissement de l'OMC, il y a 20 ans. Une fois entré en vigueur, il devrait réduire le coût total du commerce de plus de 14% pour les pays à faible revenu et de plus de 13% pour les pays à revenu intermédiaire de la tranche supérieure, en simplifiant la circulation des marchandises à travers les frontières», explique l'OMC dans un document de présentation de l'accord.

Un argument soutenu par le directeur de l'institution, Roberto Azevêdo qui estime que «cela entraînera une augmentation du commerce mondial qui pourrait atteindre 1 000 milliards de dollars par an, les pays les plus pauvres enregistrant les gains les plus importants. Cela aura un impact plus grand que l'élimination de tous les droits de douane existant dans le monde».

Notons que l'accord est entré en vigueur le 22 février 2017, après la fin du processus de ratification interne engagé par les deux tiers des 164 pays membres de l'OMC.
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Old September 8th, 2017, 12:54 AM   #365
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Le directeur adjoint de la Banque de Développement de Chine, (CDB), Ding Xiangqun, a été reçu mardi par le ministre djiboutien de l'Energie, Yonis Ali Guedi.

Accompagné de Li Wei, vice-président de la société chinoise POLY-GCL Petrolum Group, Ding Xinagqun est à Djibouti pour donner un nouvel élan à un méga projet concernant la construction d'un gazoduc entre Djibouti et l'Ethiopie avec, en annexe, une usine de liquéfaction et un terminal gazier.

Ce projet sera financé et réalisé par la firme chinoise POLY-GCL Petrolum Group à hauteur de quatre milliards de dollars.

Il s'agit en effet de la construction d'un pipeline qui transportera jusqu'à 12 milliards de mètres cubes de gaz naturel par an depuis l'Ethiopie vers Djibouti. Longue de 700 km, elle permettra ainsi à l'Ethiopie d'exporter du gaz vers la Chine, et boostera le développement de ces deux pays de la Corne d'Afrique.


Selon un communiqué du ministère djiboutien de l'Energie, chargé des Ressources, publié à l'issue de cet entretien, les deux parties ont rappelé que ce méga projet va insuffler une nouvelle dynamique dans les économies de l'Ethiopie et de Djibouti, mais aussi de toute la sous-région.

"Ce projet est capital pour le développement industriel de Djibouti. C'est pourquoi le gouvernement djiboutien a apporté, dès la première heure, un soutien total à ce projet auquel il reste disposé à mettre en œuvre tous les efforts nécessaires afin qu'il puisse démarrer le plus rapidement possible", a fait savoir le ministre djiboutien de l'Energie chargé des Ressources Naturelles, Yonis Ali Guedi.

De leur côté, le directeur adjoint de la Banque de développement de Chine et le vice-président de POLY-GCL ont tour à tour exprimé leur souhait de collaborer davantage avec le gouvernement djiboutien pour mettre en œuvre ce projet et ont rappelé par la même occasion que celui-ci va changer la structure de l'énergie à Djibouti car l'utilisation du gaz naturel est une tendance mondiale. 


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The Deputy Director of the Development Bank of China (CDB), Ding Xiangqun, was received on Tuesday by Djiboutian Energy Minister Yonis Ali Guedi.

Ding Xinagqun is in Djibouti with Li Wei, vice-president of the Chinese company POLY-GCL Petrolum Group, to give a new impetus to a mega project for the construction of a gas pipeline between Djibouti and Ethiopia, a liquefaction plant and a gas terminal.

This project will be financed and realized by the Chinese firm POLY-GCL Petrolum Group to the tune of four billion dollars.

This is the construction of a pipeline that will carry up to 12 billion cubic meters of natural gas per year from Ethiopia to Djibouti. The 700 km long expanse will allow Ethiopia to export gas to China and boost the development of these two countries of the Horn of Africa.

According to a statement issued by the Djiboutian Ministry of Energy, in charge of Resources, published at the end of the meeting, both parties recalled that this mega project will bring a new dynamic to the economies of Ethiopia and Djibouti, but the entire subregion.

"This project is crucial for the industrial development of Djibouti, which is why the Djibouti government has given full support to this project from the outset and remains ready to make every effort to ensure that it start as quickly as possible, "said Djiboutian Energy Minister for Natural Resources Yonis Ali Guedi.

For their part, the Deputy Director of the Development Bank of China and the Vice-President of POLY-GCL expressed in turn their desire to work more closely with the Djiboutian government to implement this project and recalled at the same time that this one will change the structure of energy in Djibouti because the use of natural gas is a global trend.
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Old September 12th, 2017, 12:56 AM   #366
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I did not know Ethiopia produces natural gas.

Which region is it coming from?
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Old September 12th, 2017, 02:26 AM   #367
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Ogaden.
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Old September 13th, 2017, 01:12 AM   #368
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Is it just me nervous about the amount of loans Jabuuti is racking up.
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Old September 13th, 2017, 07:49 AM   #369
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Originally Posted by labadhagax View Post
Is it just me nervous about the amount of loans Jabuuti is racking up.
No, the significant increase in public debt is a real worry here, with the debt to GDP ratio reaching around 81% of GDP in 2017.

Some large infrastructure projects have been cancelled or postponed in order not to aggravate the situation, it is for example the case of the new airport or the second railway line (Tadjoura-Mekelle)
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Old September 14th, 2017, 09:09 PM   #370
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Is the issue with the Tadjoura-Mekelle railroad not on our side? With the Awash-Mekelle line underway it makes sense to assign it lower priority in favor of places that currently have no rail access. Perhaps a spur of the Addis-Djibouti mainline to Tadjoura as an alternative?
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Old September 23rd, 2017, 10:59 PM   #371
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Gas development project behind schedule

How can it be so difficult?!

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Gas development project behind schedule
23 September 2017,
By Kaleyesus Bekele

Ethiopia’s first natural gas development project in the Ogaden basin, Somali Regional State, is delayed due to various reasons including complex negotiations with the Djiboutian government on gas pipeline construction to the port of Djibouti.

The Chinese firm Poly-GCL signed petroleum development agreement with the then Ministry of Mines in November 2013 that would enable the company develop the natural gas reserves in the Ogaden basin and prospect for additional oil and gas deposits. Poly-GCL has been undertaking various petroleum exploration and reserve estimation work in the Calub, Hilala and Genale localities where there is a vast gas reserve. The company has been drilling appraisal gas wells and oil and gas exploration wells in the Ogaden basin, which demonstrated promising results.

Poly-GCL planned to build a gas pipeline all the way from the gas fields to the Port of Djibouti stretching 700kms and a gas treatment plant at the Port that process the gas and export it to China. The gas development project is estimated to cost four billion dollars – a mammoth development project that ranks among the top three infrastructure development projects in Ethiopia along with the Addis Ababa-Djibouti Railway and the Grand Ethiopian Renaissance Dam.

Originally, Poly-GCL planned to start gas production in 2017 which latter was rescheduled for 2018. However, this is not going to be materialized at least until 2020 as the required infrastructure is not yet built. The Reporter learnt that Poly-GCL has not started building neither the pipeline nor the gas treatment plant.

Motuma Mekassa, the Minister of Mines, Petroleum and Natural Gas, told The Reporter that there is a significant amount of proven gas reserve that Poly-GCL intends to develop and export to China. Motuma said that the project is delayed due to the complicated negotiation with the Djiboutian government. “The pipe construction, gas transport and port utilization are all part and parcel of the negotiation. An LNG (Liquid Natural Gas) plant would be built at the Port of Djibouti. The gas would be transported by pipe and it will be liquefied at the LNG plant and would be exported to China by LNG tanker vessels,” Motuma said.

The minister told The Reporter that there is an ongoing negotiation between Poly-GCL and the government of Djibouti. “It is a complex negotiation which took a long time. It has been a bit delayed. Our government is persuading the parties to expedite the negotiation. We hope that it would be finalised soon and an agreement would be signed and the pipeline construction would begin in 2018,” Motuma said.

The business times recently reported that Poly-GCL Group is in final talks with a Singapore yard group called Sembcorp Marine to award a contract to build a floating LNG plant. Poly-GCL Petroleum's chairman and president, Barton Yu, said the project aimed at tapping the vast reserves of Ethiopia's Ogaden basin will be developed across three phases, scaling up from a start-up capacity of three million tons per annum from early 2020 to 10 million tons per annum once the full field development kicks in.

The contract value to design and build the floating LNG is estimated at one billion dollars. Poly-GCL aims to start production at its Ogaden basin project by early 2020.

Yu said that a final investment decision on the project is expected in September or October and construction on the FLNG may begin before the end of 2017. Poly-GCL has also purchased a second-hand LNG carrier.

Poly-GCL is seeking regulatory approval to operate a terminal in China for the purpose of importing gas from Ethiopia but Yu also stressed that the company is concurrently reaching out to gas buyers in Europe, Japan and the larger Asia.

Poly-GCL drilled Calub11 and Hilala5 appraisal wells in 2015 and conducted well testing. Previously, 10 wells were drilled in the Calub gas fields. Out of these eight were made ready for gas production. The Calub gas field is located 1,200km south-east of Addis Ababa. Hilala is 80km further to the east.

Poly-GCL has prepared a gas field development plan based on the reserve estimate. The gas reserves in Calub and Hilala are estimated to be four TCF (trillion cubic feet). Another 0.6 TCF gas reserve was discovered by Petronas, Malaysian oil and gas giant, in Genale locality.

Poly-GCL hired another Chinese firm BGP Geo Services that acquired 3D and 2D seismic data from its concession in the Ogaden basin measuring 117,151sq.km.

The gas reserves in Calub and Hilala localities is estimated at 118 billion cubic meters (4TCF). The gas reserve was first discovered by an American oil company, Tenneco, in 1972. Crude oil reserve was also discovered in the Hilala block but the reserve was non-commercial. The Russian company, Soviet Petroleum Exploration Expedition (SPEE), confirmed the gas reserves in Calub and Hilala in the 1980s.
I am posting that in the Ethiopia forums as well...
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Old September 24th, 2017, 03:11 PM   #372
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Originally Posted by Simfan34 View Post
Is the issue with the Tadjoura-Mekelle railroad not on our side? With the Awash-Mekelle line underway it makes sense to assign it lower priority in favor of places that currently have no rail access. Perhaps a spur of the Addis-Djibouti mainline to Tadjoura as an alternative?
I guess it makes economic sense to put the Mekelle-Tadjoura line on hold for Ethiopia. As for Djibouti, I think the trend here is to freeze all major projects directly financed by the government for now not to aggravate public debt.

Other major projects with private funding are under way though.

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Originally Posted by metrancya View Post
Gas development project behind schedule

How can it be so difficult?!
Thanks for posting this, but the article is vague as to the reasons of the delay. If confirmed, this will be the single largest investment project in Djibouti, and greatly beneficial to Ethiopia as well. I really hope this goes ahead.
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Old October 11th, 2017, 11:43 AM   #373
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IMF: For Djibouti, Infrastructure Investment Paves Way to Regional Hub

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April 6, 2017

Djibouti’s recent investment boom in infrastructure has the potential to transform the economy into a regional hub for East Africa, creating more jobs and helping the country return to a sustainable level of debt, says the IMF in its latest assessment of the economy.

"The authorities should advance rapidly with critical reforms aimed at translating investment into strong, inclusive, and job-creating growth," says the IMF’s mission chief for Djibouti Eric Mottu.

The small state in the arid Horn of Africa, neighboring land-locked Ethiopia, largely depends on its deep-water harbor. The country is expanding its transportation and utilities infrastructure to leverage its strategic location as a transshipment hub and host to military bases.

However, the advantages of the strategic location have not been exploited in full. Growth in the past has been uneven and insufficient to lift the population from poverty and provide sufficient jobs. As a result, about 41 percent of the population is poor, 23 percent live in extreme poverty, and the unemployment rate is 39 percent.

Betting on investment

To address these challenges, the authorities’ development strategy Vision Djibouti 2035 aims at transforming the country into a logistics and commercial hub for East Africa. The strategy includes large-scale investments focused on public sector projects—such as the construction of a railroad to Ethiopia and a water pipeline—and targets a medium-term growth of 7.5–10 percent per year, tripling per capita income, and reducing unemployment. Chinese investors finance many of these projects.

Early results of these investments are encouraging. Growth is estimated to have reached 6.5 percent in 2016, driven by public sector investments. For 2017–19, growth is projected to increase to 7 percent supported by the railroad, the multipurpose port, and other public investment, which should stimulate private sector activity and foreign direct investment.

Debt buildup

Despite more growth, the country is now at a high risk of debt distress as most of these infrastructure investments have been financed externally—pushing external debt from 50 to 85 percent of GDP in just two years.

Rising debt service obligations not only present considerable fiscal risks—the 2016 government budget deficit, including spending on the water pipeline and the railroad, reached about 16 percent of GDP—but could also hamper priority social spending.



Focus on reforms

Therefore, to reap the benefits from these massive investments and ensure that they are shared by all, the authorities will need to focus on several key reforms, aimed at translating the investment boom into strong,inclusive growth to reduce poverty, create jobs, and return debt to a sustainable path.

Debt strategy: Develop a coordinated debt strategy aimed at establishing debt sustainability, given the high risk of debt distress; adopt a public debt law and set an explicit debt anchor, such as public debt-to-GDP ratio.

Fiscal policy: Continue reforming the tax system based on the recommendations of the 2015 National Tax Conference; launch a comprehensive review of tax expenditures, exemptions, and special tax regimes with a view to phasing them out.

Structural reforms: Focus on reforming public enterprises to enhance their efficiency, strengthen governance, and improve their capacity to manage investment projects; pursue reforms to improve the business climate and strengthen competition.

Financial sector: Focus monetary and financial policies on the stability of the banking system, financial inclusion, and external stability.

Data: Improve statistics, in particular GDP calculations and financial statements of the public sector to improve decision-making.
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Old October 15th, 2017, 03:29 PM   #374
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Djibouti is poised to transform itself if it takes advantage of this current moment of infrastructure and investment boom

Djibouti does not frequently feature in the headlines, but the leader of the tiny country in the Horn of Africa and his international partners recently touted this state of rock mountains, and extremely hot weather as the new Dubai, the Shekou of East Africa, and the rising African Singapore.

If it sounds difficult to imagine such a glowing future for a country which the Associated Press once dismissed as a place devoid of resources “except for sand, salt, and 20,000 camels”, think for a moment of the state of the Arabian Gulf metropolises in the early 60s which would in a mere 30 years transform from impoverished pearling villages into Arabian Manhattans. Djibouti is poised to transform in much the same way in a fraction of the time, if it takes advantage of this moment of opportunity.

Djibouti counts on its vital strategic location for global trade and regional geopolitics to propel its development.

When Djibouti gained its independence forty years ago, nothing promised a great future for the microstate. If anything, it was at risk of being swallowed up by one of its two powerful neighbors as predicted by the New York Times at the time. In a dispatch from the city one month before independence the NYT wrote: “Because these two feuding countries had been moving in to exert control over the territory and because it is so impoverished that it cannot stand on its own, many feared that that its independence would be a flashpoint for a major war on the so‐called horn of Africa.”

Ethiopia relied on Djibouti port as its economic lifeline and Somalia had a historical claim on Djibouti as being part of a pre-colonial Somali territory. An imminent clash between the two countries in 1977 was averted by Djibouti’s decision to stay away from an anticipated and much touted union with Somalia. Although Djibouti remained mainly peaceful with the exception of a short-lived insurgency of the Afar people, the second largest ethnicity in the country after the Somalis, the country had to wait for the end of the Cold War to reap the benefits of its strategic location.

Consumed by internal strife and superpower rivalry during the Cold War, Ethiopia and Somalia went through devastating civil wars which finally ended the strongmen regimes in both countries. In fact, Djibouti, originally a bone of contention between her neighbors, later became the place where both poor refugees running away from conflict and rich businessmen seeking a safe haven for their money took refuge.

But the moment that chaos gripped Somalia and led to the rise of extremism and piracy in the Indian Ocean, which accounts for 70 percent of the total traffic of petroleum products and 50 per cent of world’s container traffic, Djibouti struck gold for its location. Moreover, with a global loss of about $7 billion (Dh25.74 billion) at the height of piracy in 2011, the location of Djibouti has become as precious a resource as a new oil find. Marine forces of industrial and post-industrial countries flocked to Djibouti to base their anti-piracy operations there.

As an American journalist once said, Djibouti’s importance boils down to three things: “Location, location, location.” Due to its proximity to hot conflict zones in Africa and the Middle East including Somalia, Sudan, Yemen, Syria, and Iraq, Djibouti is one of the few countries poised to reap the benefits of such a dangerous neighborhood.

Apart from the French Foreign Legion that has been based there since independence, the United States established its largest military base in Africa in Djibouti’s Camp Lemonnier in 2002. This was soon followed by major powers who secured their presence in Djibouti with China building its first overseas military base there which opened this year.

Boosting Country’s Infrastructure

But apart from the windfall in rent from these new bases, Djibouti’s real economic breakthrough came in 2006, when DP World gained a concession to develop and operate the Doraleh Container Terminal (DCT), leading into the opening of DCT in December 15th, 2008 as one of the most technologically advanced container terminals on the African continent.

Capitalizing on its location, Djibouti earmarked billions of dollars for infrastructural investment over the next five years, according to Djibouti Vision 2035. The plan includes the construction of a chain of ports and free zones in an agreement with China. Kick-starting the development spree was the inauguration of several ports including the completion of the first phase of the ultra modern Doraleh Multipurpose Port built by the Hong Kong based China Merchant Group (CMG), a partner of Djibouti Port SA.

Talking to China Daily, CMG president Li Xiaopeng said: “Making full use of Djibouti’s geographical advantages, we are in the process of making the country the ‘Shekou of East Africa’. He said they would put their model in Shekou, known as “Port-Park-City, into practice in Djibouti. A sprawling development project of a business district with commercial and tourism facilities is also expected to be completed by 2021 at the location of the old port.

Among Djibouti’s most ambitious projects are a number of railways that started with the opening of the Chinese built railway track, the first electric transnational railway in Africa, linking Addis Ababa to the port of Djibouti. The importance of the 752Km railway lies in the fact that Ethiopia, the most populous landlocked country in Africa and the fastest growing economy in the world according to World Economic Prospect Report 2017, imports more than 90 per cent of its trade through Djibouti which accounts for 70 per cent of Djibouti ports’ overall operations.

Another Chinese financed Ethio-Djibouti project is the Damerjog Hydrocarbon infrastructure, due to be completed next year, which will include an LNG Terminal that will export gas from Ethiopia’s Ogaden region primarily to China via Djibouti. Also in the design is another 550Km long pipeline planned to transport refined diesel and gasoline fuel from Djibouti’s to central Ethiopia, while another 1,600Km pipeline is planned to transport crude oil from Southern Sudan’s Melut basin to Djibouti.

The most ambitious project underway is a 8,715 km trans-African highway linking Dakar (Senegal) to Djibouti (Djibouti) and will traverse 10 West, Central and East African countries when it is completed in 2022. Djibouti will also have two more major airports to be completed by 2019.

The boom’s economic and political pitfalls

Despite the investment boom and the country’s growth rate considered one of the highest in Africa, the International Monetary Fund (IMF), cites that 41 percent of the population of Djibouti is still poor and 23 percent live in extreme poverty, while the unemployment rate stands at 39 per cent according to the IMF and African Development Bank.

“The authorities should advance rapidly in critical reforms aimed at translating investments into strong, inclusive, and job-creating growth”, said a statement by the IMFs mission chief for Djibouti.

Both Institutions also cautioned Djibouti authorities that the country is at a high risk of over-indebtedness due to most of the infrastructure investments are financed externally. The government, however, argues that the objective of vision 2035 is to bring economic transformation to offset the debt crisis.

On the political front, President Ismail Omar Guelleh who came to power in 1999 has won every election since then after amending the constitution to run more than two times. Opposition figures accuse him of denying a level playing field for his opponents and silencing dissent voices. Even the American Foreign Policy magazine branded Djibouti as “A friendly little dictatorship in the Horn of Africa.”

Given the President’s vision of ambitious and speedy infrastructural development, one wonders if he will join the club of similar benevolent authoritarians who led their countries to modernity and prosperity. But that is a consideration for historians and the passing of time. From the current vantage point Djibouti enjoys a wealth of opportunities and the door to prosperity lies wide open. The moment waits to be seized.
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Old October 15th, 2017, 05:02 PM   #375
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Given Djibouti’s economic reliance on international trade and the scarcity of natural resources, manufacturing industries have always played a secondary role in the country’s economic development. However, authorities are now looking to boost their development as a means to cut unemployment and foster more sustained and inclusive economic growth.


Sector Size

In line with many emerging markets in Africa, Djibouti’s manufacturing sector has seen its contribution to GDP trend downwards in recent decades, with a limited share of 3.7% of GDP in 2014 compared to 8.1% in 1977 – a result in this instance of the country’s expanding focus on service activity.

As a result, there are currently just over 30 formal, large-scale, commercial manufacturing enterprises operating in the 850,000-person country, which is equivalent to just over 1% of the total number of companies. The firms are, by and large, focused on the domestic market as opposed to exports, with a number of companies operating in the building materials, beverage and mineral water, industrial gas, and plastic and paper production segments.

As a result, while activity was historically dominated by domestic investors, that is now beginning to change: Djibouti’s National Investment Promotion Agency (Agence Nationale de Promotion des Investissements, NIPA) noted an increased number of international industrial investment projects between 2010 and 2014, corresponding to 32% of the total projects approved by the Code of Investments. As the country continues to liberalise and seeks to expand its role as a gateway to East Africa, manufacturing activities are beginning to benefit.

Vision 2035

Improvements to the investment climate and governance framework form a central part of the Djibouti government’s Vision 2035 strategy for economic development and is key to facilitating the growth of industry in the country (see analysis). Under the plan, initiated in 2014, authorities aim to reinforce Djibouti’s human and financial capacities to improve its ability to conceive and conduct industrial projects as well as feasibility studies. Similarly, authorities are looking to build dialogue platforms with private operators to encourage their participation in the development of a public-private partnership framework and business climate improvements.

The plan also makes access to energy and energy security a primary strategic focus and envisages a power sector transition from 100% fossil thermal fuels in 2010 to 100% renewable energy by 2020. Moves made towards this transition will help to remove one of the primary barriers to industrial and manufacturing growth – high energy costs and unreliable supply (see Energy chapter). “One of the main issues facing the industrial development of Djibouti is the lack of access to affordable energy,” Hikmat Daoud, CEO of gas manufacturer and supplier Compagnie de Gaz de la Mer Rouge (CGMR), told OBG. “The government’s plan to emphasise renewable energy sources will allow the country to become more independent and offer better rates to active enterprises.”

Raising Competitiveness

Manufacturers in Djibouti, as is the case in many economies in Africa, face a number of challenges, including high input costs, but the country nonetheless has sought to increase its comparative advantages, particularly for export-oriented industries. One of Djibouti’s primary assets is its location as a gateway to a regional market of more than 400m people, including COMESA and GCC member states. The export opportunities this opens up are most visible with neighbouring countries South Sudan and Somalia, with easy access to Djibouti City and, in particular with Ethiopia, which has a population of 95m, and has, in recent years, seen economic growth as high as 10%. “With Djibouti’s excellent geographic positioning, the country serves as a gateway to the region,” Ahmed Osman Guelleh, chairman of Djibouti-based GSK Group, told OBG. “The expanding regional market offers a lot of opportunities for the introduction of new products. By creating a manufacturing industry in the country that appeals to the regional customer, Djibouti will be able to kick-start its industrial development.”

Upgrades

Much of Djibouti’s competitiveness as a manufacturing destination comes from recent reforms and upgrades to its soft and hard infrastructure. Djibouti’s maritime facilities, for example, are well-developed, with ample capacity, high productivity and a range of upgrades currently in the works (see Transport chapter), and the government has broken ground on a new railway and range of motorway upgrades. Perhaps most critically for a country in which electricity prices remain higher than the regional average, Djibouti has also inaugurated new interconnection projects and renewable energy facilities – under Vision 2035 – to increase the power supply. Djibouti currently hosts a number of free zones that offer investors a number of fiscal incentives and one-stop-shops (see Economy chapter).

By the end of 2014, these zones were hosting 189 tenants, and while the majority of them were classified as trade and financing companies, the authorities have told local media that they looking at bringing in manufacturers as well. “Djibouti has improved a lot when it comes to facilitating the registration of companies in the country. Whereas the procedure once took over 30 days we have brought this back to 24 hours,” Ouloufa Ismail Abdo, manager at Office Djiboutien de la Propriete Industrielle et Commerciale (ODPIC), told OBG. “Making use of digital tools, the companies can access the required documents online and present them in person, after which all data will be stored electronically.”

In March 2015 Djibouti and China Merchant Holding signed an agreement to develop a $3.5bn project called Djibouti Free Zone, which is targeting manufacturing activities, including electronics assembly, as well as providing regional distribution services. Nor is China the only one. “Turkey plans to use a manufacturing base in Djibouti to export goods to East Africa and beyond,” Ilyas Moussa Daweleh, Djibouti’s minister of finance and economy, told local press.

Building Materials

The building materials segment is currently the largest manufacturing sub-sector in Djibouti and is dominated by the production of cement. As a whole, Djibouti still imports roughly 65-70% of its needs in terms of building materials, with most of the imports coming from Turkey for steel, China for tile and ceramics and Pakistan for special cement. However, as Soubaneh Said Ismael, director-general at Laboratoire du Batiment, a materials testing laboratory, told OBG, “Demand for building materials should grow rapidly at a rate of 35-40% during the next few years, especially if the government implements the Vision 2035 roadmap.”

While specialty cement for major infrastructure projects has to be imported, the majority of domestic cement consumption is met by the output coming from the two main operators: state-owned Cimenterie d’Ali Sabieh (CDS) and UAE-based Nael Cement. These two plants were both built in 2013, with CDS’s nameplate capacity at 240,000 tonnes per year and Nael Cement’s at 220,000 tonnes per year. Combined, the two producers are able to meet more than 90% of current demand for cement – a figure that has risen over the years in the wake of the development of large-scale transportation infrastructure. “Local production of building materials can yield surprising benefits. For example, whereas international cement prices have been rising due to increasing petrol costs, locally produced cement has shown solid quality levels at a more competitive price,” Ismael told OBG.

Expanding Production

Thus far, both facilities have been importing most of their needs in raw materials, but CDS is now planning to move up the value-chain by extending its production of raw materials – including limestone, clay and sand – on top of gypsum, which it has been already extracting. All together, the company expects to produce 600 tonnes of clinker per day as of March 2016 to both meet its own needs and, potentially, to sell.

Yet, despite the growing demand for cement, the two companies have recently been operating at only one third of their capacities, which is equivalent to 200-215 tonnes per day out of a potential 600-650 tonnes, due to the fact that the recent large-scale infrastructure developments that are driving demand require a special Sulfate Resistant Cement (SRC) instead of the locally manufactured Ordinary Portland Cement. CDS is planning to start producing SRC in 2016 to meet this need, which, according to Yacoub Abdi Djama, managing director of CDS, is expected to quadruple during the next few years if the infrastructure projects continue to develop.

While cement accounts for the bulk of building materials manufacturing and comprises roughly 40% of Djibouti’s overall demand in terms of building materials, several other factories are also active in segments like brick and marble. Factories owned by Ecobrique, the country’s sole brick and ceramics producer, with a capacity of 100 tonnes of materials per day, and Al Gamil, a marble producer, allow Djibouti to meet 80% of its brick and marble needs locally, according to Ismael. India’s Fabtech is also planning to build a steel plant which should enable Djibouti to meet 60% of its building material needs.

FMCG

Due to the country’s primarily arid climate and its very limited size, Djibouti has had somewhat limited success in cultivating a large-scale agricultural sector (see Economy chapter), which naturally constrains the opportunities for most domestic agri-businesses and fast-moving consumer goods (FMCGs). However, in recent years, rising consumer demand has spurred some growth in the beverage industry.

The longest-running beverage manufacturer in the country is locally-owned Coubèche, a company founded in 1885, which was, at first, dedicated to ice production before gaining the bottling license for Coca-Cola’s carbonated soft drinks and mineral water in 1964. With current beverage production running at about 500,000 hectolitres in 2015, the company today holds roughly 95% of market share for soft drinks and 60% for mineral water. Its production plant is located on a 28,000-sq-metre site near the Port of Djibouti and occupies a plot covering some 17,000 sq metres in the industrial zone.

The direct employer of over 630 people, Coubèche is the sole local soft drink producer but competes with three local producers in the bottled water segment, namely: Eau de Tadjoura, a subsidiary of Dubai-based Lootah; Bio, owned by locally based SODICOM; and the latest arrival, Iljano, a company initially owned by the state that was bought by local AZKA group in 2014. As such, imports in the soft drink segment account for less than 5% of market share and 10% in the bottled water segment. “Overall, consumer purchasing power in Djibouti has been increasing,” Magda Rémon Coubeche, president of Coubèche, told OBG. “This has led to more demand for branded products and higher quality standards.”

Locally Driven

Local producers are well-placed to benefit from Djibouti’s steady headline growth. The demand for beverages rose by 14% in 2015 and is expected to increase by 6% in 2016. In the short term, Coubèche plans to increase capacity. “Demand is driven by the fast-growing disposable income of Djiboutian people, resulting from the recent wave of foreign direct investments (FDI) and rapid growth of job creation,” Christophe Chenot, director of marketing at Coubèche, told OBG.

Djibouti’s local dairy production base, established by Laiterie de Djibouti, a formerly state-owned company that ceased production in 2010 due to financing issues, could soon see a revival. According to the local press, the recent high rates of growth have prompted other investors, such as the locally owned GSK Group, to explore the possibility of opening a new milk and juice plant in the country. The opportunity to move up the value chain or expand capacity with an eye to exporting to other markets is more constrained, however. “Djiboutian manufacturing companies cannot yet invest heavily in costly industrial facilities and equipment, as they only rely on a limited domestic market for their return on investment and still struggle to be competitive internationally due to the high cost of utilities, like electricity,” Chenot told OBG.

Agro - Industry

Outside of the beverage industry, Djibouti is also seeing modest production in the fisheries segment and is largely able to address the majority of demand. While informal fishing activity is common, the sole formal processor is Red Sea Fishing, which collaborates with roughly 200 independent fishermen to collect and process their catch. In 2015 the country’s formal fish production amounted to roughly 2500 tonnes, equivalent to 90% of domestic demand, and this yielded an annual turnover of roughly $3m. According to Mahamoud Youssouf, managing director of Red Sea Fishing, “Local demand for fish has risen by 30% in recent years as meat prices have tripled and the expatriate community – a clientele who seeks out healthy food – has grown significantly.” In a bid to meet the increasing local demand in the country, Red Sea Fishing said it is working towards making further investments in boats and facilities in order to increase their total annual catch.

Potential

There is certainly plenty of scope for expanding capacity. The World Bank estimates Djibouti’s annual fish capacities are upwards of 30,000 tonnes, meaning that only 4.5-5% of the country’s fisheries potential is currently exploited, although increasing production will involve significant investment in equipment and skills training in the sector.

Fisheries already account for 2% of Djibouti’s GDP, equivalent to two-thirds of the share of the primary sector. Subsequently, the authorities are now looking to double annual fish catching capacities to 5000 tonnes by 2020 with the intention to fully satisfy the domestic market and target exports to Gulf countries, according to Youssouf (see Economy chapter). In line with this, the government is investing in an upgrade of the fishing port and establishing a food hygiene laboratory to ensure compliance with export standards. Nonetheless, for Youssouf, stepping up production remains the priority going forwards. “We need to first increase and consolidate our capacity for fish production before considering exporting and developing activities with higher added-value, such as canned fish production,” he said.

Low levels of activity are also ongoing in a broad range of other food-processing segments, although much of the activity remains outside the formal sector. Djibouti hosts one state-owned abattoir – currently under refurbishment – as well as a handful of cold rooms to store imported meat from East Africa Holding, a subsidiary of local group GSK. However, as meat from small ruminants, such as goats, accounts for 70% of Djiboutians’ total meat consumption, the potential for growth is significant, with domestic demand expected to rise on the back of higher disposable income levels. Djibouti already plays a role in animal husbandry and livestock exports through the Damerjob quarantine centre. Built in 2006 by the state, the $20m live cattle regional centre is managed by Saudi Arabia’s Abu Yasser International and ensures the transit of 2m cattle heads annually between the Horn of Africa and Gulf countries.

One of the biggest challenges to securing food supply locally in Djibouti is that the majority of the land is non-arable which, as Abdoulkarim Niazi, assistant director-general of retail company Al Gamil, told OBG, presents a challenge. “There needs to be a solution to the lack of agriculture available in the country and corresponding food insecurity by finding inventive ways to either produce the products possible, such as dates, or to expand the usage of land in neighbouring countries, like Ethiopia, from which foodstuffs can be imported at a lower price, instead of being transported all the way from Europe.”

Industrial Gas

Djibouti also produces industrial gas, via the locally owned CGMR. The plant currently produces oxygen, acetylene and nitrogen for Djibouti’s health care and construction sectors. With gas production capacity of 250 cu metres per hour, the company largely exceeds Djibouti’s needs in industrial gas and also exports to neighbouring markets such as Somalia. The development of transport infrastructure, including port extensions and railway developments, has increased demand for gas considerably, prompting India’s Fabtech to develop gas bottling activity in order to share in the expanding market.

Salt Mining

With modest production of salt, basalt, brick clay, sand, gravel and dimension stones, mining still plays a role – albeit minor – in the economy, contributing 1% to GDP. Historically, salt has been the major mineral produced in the country, sourced from the hypersaline Lake Assal in the centre of the country. According to a report on the minerals industry by USGS, in 2000 there were 15 salt mining companies in Djibouti, which produced, in total, 120,000 tonnes per year, but the industry has shrunk over the past decade, and in 2010 it produced only 12,000 tonnes before activity nearly ceased altogether with the discovery of salt deposits in the Afar region of Ethiopia.

According to local media, in April 2012 a contract was signed by the Port of Djibouti, China Harbour Engineering and Salt Investment, a Djibouti-based company owned by the US’s Emerging Capital Partners, to develop Goubet Port, located 40 km south of the Gulf of Goubet and near to Lake Assal, into a hub for salt exportation. Pegged for completion in 2016, the $63m project will include a new ore terminal and product storage area and will redevelop the road linking the lake and the port.

Mineral Prospects

Gold is also the subject of exploration. Since 2013, UK-based Stratex International and Thani Ashanti Alliance, a joint venture of South Africa’s AngloGold Ashanti and UAE-based Thani Dubai Mining, have been awarded blocks at the Oklila prospect. JB Djibouti Mining, a unit of JB Group of India, also obtained a gold exploitation license in 2011. To stimulate further investment, the Ministry of Energy is working on an inventory of the country’s mineral resources in the hopes of sparking small-scale activity in outlying regions: the Ali Sabieh region, for example, houses deposits in sandstone, limestone and ornamental stones; Tadjourah has corallian limestone, clay and pumice; and the Obock region holds stores of ilmenite sand, corralian limestone and an abundance of ornamental stones.

Challenges

Across Djibouti’s various industrial subsectors, the general trajectory is a positive one, with investment increasing to varying degrees and a supporting legislative and incentive framework helping attract new arrivals. However, as with any emerging market, there are still plenty of bottlenecks to be addressed, including the constraints to growth resulting from the small size of the local market, which means that domestic producers must eventually look to export markets for further growth. Local industrial companies also suffer from the high cost of utilities. According to the Djibouti Enterprise Survey by the World Bank, some 49% of firms in Djibouti rated access to electricity as the biggest obstacle to daily operations. High labour costs are also limiting growth, as a non-qualified worker is paid, on average, $300 per month in Djibouti, compared to $70 in Ethiopia, $100 in Egypt or $170 in Mauritius.

Outlook

Within the context of the redistribution of the global industrial environment and, notably, the relocation of productive activities from China to African countries, Djibouti, as the gateway to East Africa, is well-positioned to supply manufactured goods to the surrounding landlocked countries. By encouraging FDI in its free zones, Djibouti has an opportunity to boost manufacturing activities. Meanwhile, the potential for growth in Djibouti’s subsectors, in particular cement and building materials, bolstered by the country’s ongoing infrastructure investments, is strong. With fisheries and salt mining set for growing investment due to rising local demand and efforts to strengthen the business climate, there is definite scope for industry to play a larger role in the economy.
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Old November 12th, 2017, 08:04 AM   #376
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The governments of Ethiopia and Djibouti have agreed to expand the horizon fuel terminal at the Port of Djibouti and to upgrade the Ethio-Djibouti corridor road.

Ethiopian Minister of Transport Ahmed Shide and his Djiboutian counterpart Mohamed Abdulkadir held a meeting early this week in Addis Ababa. The ministers discussed various bilateral issues including infrastructure development.

Djibouti is considered as the natural gateway of Ethiopia, which is highly dependent on the Port of Djibouti for its import-export activities. One of the challenges facing Ethiopia is the limitation of the Horizon Fuel Terminal of Djibouti. As the Ethiopian economy is growing fast the amount of fuel import is increasing proportionally. But the storage capacity of the Horizon Fuel terminal is limited.

The Ethiopian Petroleum Supply Enterprise has revealed that it has become a big challenge for Horizon Terminal to accommodate Ethiopia’s growing fuel import. Ethiopia’s annual fuel import which is growing at a rate of ten percent reached at 3.8 million tons. The Horizon Djibouti Terminal has a storage capacity 371,000 cubic meters of petroleum products.

Ahmed Shidie told The Reporter that the two countries are discussing how to expand the Horizon Fuel Terminal. “We are discussing with Djibouti on how to expand and attract investment in this type of facility in Djibouti.”

The minister said Ethiopia and Djibouti have a comprehensive and excellent cooperation. “As you know Ethiopia is a country of 100 million population, fast growing and also landlocked. So Djibouti is a major gateway to sea access. And the investment on the railway line and the road and Djibouti’s investment in port infrastructure complements each other. It will facilitate the logistic and transport demand of Ethiopia particularly regarding sea access,” he said.

The newly built Ethio-Djibouti railway line built at a cost of four billion dollars is having a test run. The railway will start commercial operation this month. “We are discussing with Djibouti in terms of how to expand and attract investment in this type of facility in Djibouti,” Ahmed said.

Djibouti Transport minister, Mohamed Abdulkadir, told The Reporter that his country wants to give the best port service to Ethiopia. “Ethiopia’s economy is growing very fast and it is essential for Djibouti to provide the best service to Ethiopia. We are making a lot of investments in the port. We are building the railway line which will start commercial operation this month,” the minister said.

According to him, the Ethio-Djibouti Railway Corporation has adopted a transport tariff adding that the railway line is being certified. “The corridor will be certified and will start commercial operation this month.”

Regarding the fuel terminal, Mohamed said the Horizon Terminal will increase its capacity. “We will also build another port for oil terminal to give a better service. We will connect the new railway line to the Dorale Port and Horizon terminal. We have many plans to develop our infrastructure which I cannot disclose now.”

Mohamed said that the Ethio-Djibouti road corridor is in a very bad shape at the moment. “The road connecting the two countries is in a bad condition.” In order to alleviate the problem, the two ministers discussed on Monday on the possibility of maintaining the existing road and build a new one.

The Ethiopian Roads Authority (ERA) is maintaining the existing Ethio-Djibouti road. According to the Ethiopian Roads Authority (ERA), the Ethiopian government has decided to build an expressway all the way to Djibouti. “Since it is the import-export corridor, the existing road will not be able to accommodate the growing traffic. Hence, it has been decided to connect the two countries by an expressway,” ERA said.

The Addis-Adama expressway has already been built. Fund has been secured from the EXIM Bank of China to build the Adama-Awash expressway. The government is trying to secure loans for the construction of the Awash-Mieso-Dire Dawa and Dire Dawa-Dewale road. ERA said different construction firms are maintaining the existing road via Galafi town.

Ethiopian Airlines and Air Djibouti are also holding talks to form a joint venture. “Ethiopian Airlines and Air Djibouti will soon establish a joint venture company,” Mohamed told The Reporter.

Ethiopian Airlines Group CEO Tewolde Gebremariam told The Reporter that Djibouti will be the logistics hub of the region. “It can be the Dubai of Africa if proper measures are taken.” Tewolde said that his management is discussing with Air Djibouti to forge a new partnership. “Discussion to invest in Air Djibouti is at an advanced level.”
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Old December 19th, 2017, 02:09 PM   #377
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Djibouti is not able to handle 100% of Ethiopian imports/exports in the future

This is of importance for both the Djiboutian and the Ethiopian economy. Djibouti cannot keep its fast development pace as it is in danger to be overloaded by debt and has limited possibilities to increase the size of its port facilities. Foreseen is a slowdown of developmental pace by the government and an increasing PPP share (foreign investments) for the future and Djibouti has to accept that it will not be able to keep the current ~100% share on imports / exports for Ethiopia.

Djibouti would be tremendously successful, if it would keep a 70% share on Ethiopian imports / exports in the future, says Ilyas Moussa Dawaleh, Minister of Economy and Finance of Djibouti.

Article by Capitalethiopia, author Muluken Yewondwossen, 18 December 2017.

Djibouti continues rapid rollout of infrastructure projects

Quote:
Djibouti continues rapid rollout of infrastructure projects

Djibouti, which is undertaking massive mega projects related to port and logistics services, announced that it will continue similar projects with the Public Private Partnership (PPP) to avoid a lot of external debt. Ilyas Moussa Dawaleh, Minister of Economy and Finance of Djibouti, said that his country will continue its massive economic developments. Ilyas said his country has numbers of investments in the pipeline. “To be honest we are coming to the limit of our public financing capacity and we should not look exclusively to public investment for regional infrastructure as well as national infrastructure for diversifications,” he explained.

In the past few years the government of Djibouti has carried out massive mega projects in infrastructure, port service and other major economic pillars.
Some of the major mega projects are the expansion and new ports of the country that are targeted to accommodate the growing import/ export demand of landlocked Ethiopia. Within a single year in 2017 Djibouti has inaugurated three new ports including Doraleh Multipurpose Port (DMP), the biggest port facility for the country and in the region. Other new companies; Djibouti National Shipping Company, Red Sea Bunkering, Air Djibouti , and railway also enjoy the logistics and infrastructure business through government ownership or on a JV basis.

Different reports have also stated that the country that has close to USD 2 billion GDP has an investment of six times more of its GDP or about USD 12 billion by the government and the private sector. However the country registered massive growth in the past few years as recognized by international institutions and international partners like the International Monetary Fund who expressed their concern that the country’s external debt has been growing significantly. They advised the government to slowdown some of the projects.

However the government of Djibouti stated that it will continue with in projects using different methods than it had previously used. “Opportunities are there. Finance is not an issue as capital resource is available around the world. Capital availability in the world is highly in abundance,” Ilyas said. “Now it is all about who will implement the sound policy, the regulatory framework, and who will be dependable for direct investment. So we frame it and under implementation of PPP so the investment will be increased once the business environment is made and fixed properly. But the priority is stability and peace of the country,” the finance minister explained. He said the private sector’s role is key to transformation.

Other projects are also expected to enhance the country’s development.
“The capacity of our ports is now 20 million tons in a year and in the coming four years it will be 50 million tones,” Ilyas said. “Even if that’s the case, we can’t afford to handle 100 percent of Ethiopia’s shipments alone,” he added.
He said that Ethiopia is right to see alternative ports in the region adding that he would do the same if he was leader of Ethiopia. “We still will be the major logistics provider for Ethiopia,” he added. “We also need to diversify our market for other partners like China or countries in the Middle East and Europe. If we can manage up to 70 percent of Ethiopia’s international trade traffic volume, then my ports will be working to their capacity. The remaining must be distributed to the rest of the ports in the region,” he added.
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Old December 19th, 2017, 03:19 PM   #378
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Hi Metrancya, thank you for sharing this article

The question about financing Djibouti's infrastructure investment program, is crucial and beyond the Ethiopian IMP/EXP volumes.

Under Vision 2035, the country's development blueprint, the goal is to transform the country into the regional trade & logistics hub. It also seeks to build upon these infrastructures to diversify the economy by developing other sectors such as assembly & manufacturing (hence the U/C industrial free zone), fishing, ITC/telecoms and finance.

In order for that to succeed, several $ billion are needed to uprade/build infrastructure and as the minister pointed out, public financing has reached it's capacity, with a debt-to-GDP reaching 81% this year.

I totally agree with minister IMD on establishing PPPs and tapping into private funds to finance development, but I'm sceptic with the speed & debt of reforms. The recent reforms (it now takes 24 hours to legally create a business, end of energy producton monopoly etc...) are not enough to get the private sector to invest in longer term, costly infra projects. The fiscal reform law is still in the drawing board, absurd monopolies such as Djibouti Telecom keep blocking entire sectors, restructuring of key public companies such as our infamous EDD (power company) is yet to take place, updating the legal frameworks to protect and guarantee investments, tackling the energy shortage, addressing the high cost of doing business in Djibouti (high labor, energy, water & telecom costs etc...), a long list of outdated laws to reform etc... Not mentioning corruption & a mismanaged, inefficient public administration

Overall, I share the government's ambition but I don't see the political will to make that ambition a reality
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Old January 11th, 2018, 03:22 PM   #379
Ras Siyan
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DJIBOUTI, Dec 11 (Reuters) - Djibouti’s economy is expected to expand by 7 percent in 2018 up from an estimated 6.5 percent this year and government spending should also rise slightly in a budget focused on healthcare, a senior official said.

Located at the southern entrance to the Red Sea on the route to the Suez Canal, Djibouti has been seeking to expand its role as a transhipment hub and export route for its landlocked neighbour Ethiopia.

It is also has U.S. and French, Chinese and Japanese bases.

“The outlook for growth expected in 2018 is 7 percent, driven by direct investment and the transport, telecommunications, retail services and buildings sectors,” said Moumin Ahmed Cheikh, Justice minister and government spokesman.

He was speaking after the Council of Ministers approved the budget for fiscal year 2018, which is up 5 percent to 126 billion francs ($712.55 million) compared with the 2017 budget.

“The 2018 budget execution focuses on sustainable poverty reduction and social development, consolidation of the health system, improvement of the education system to best adapt it to the labour market and housing,” he said.

The budget also includes measures aimed at streamlining the tax systems and revision of import licences, Cheikh added.

Djibouti is expanding its port facilities to handle more bulk commodities, containers and other goods. It is also building two new airports to handle more tourists and cargo.

This year it opened three out of four ports aimed at boosting its position as a trading hub.

“The 2018 budget aims at continuing the infrastructure investment program, such as the exploitation of natural fishery resources, mineral resources, tourism and the development of renewable energy,” Cheikh said.
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Old January 20th, 2018, 03:19 PM   #380
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Djibouti is doing great. Keep up the good work.

Top 10 in Africa.
http://africa.businesschief.com/top1...ican-economies

Top 10 in the world
http://www.konbini.com/ng/lifestyle/...geria-not-one/

Last edited by Aerialviewxamar; January 20th, 2018 at 09:59 PM.
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