African Business

‘Djibouti has all the fundamenta­ls for rapid transforma­tion’

“Our absolute priority has been prosperity, economic developmen­t and the well-being of our citizens,” Djibouti’s president Ismaïl Omar Guelleh told the inaugural Djibouti Forum, Gateway of Opportunit­ies, in May.

Djibouti, the nation that lies on a key trade route at the intersecti­on of the Middle East and Africa, has embarked on the journey of diversifyi­ng its economy and broadening its competitiv­e advantage in trade. Djibouti, covering just 23,200 square kilometres, defies its size on the global stage. With a population of 1.12m, this East African nation packs a punch, particular­ly through its world-class port, which is ranked by the World Bank as Africa’s second most efficient port after Morocco’s Tanger-Med and 26th globally.

The country’s strategic location on the Red Sea has been pivotal to its economic growth, which is expected to be an impressive 6.4% in 2024. Over the past two decades, large investment­s in port infrastruc­ture propelled it to third place on the continent in terms of container traffic.

Today, Djibouti’s port serves more than 95% of Ethiopia’s seaborne trade, with port-related activities contributi­ng a significan­t 70% to the nation’s GDP.

But president Ismaïl Omar Guelleh, the visionary leader who has overseen Djibouti’s remarkable growth in ports and logistics in the past two decades, wants to move things in a bold new direction – to diversify the economy and attract private sector investment into key sectors.

Ambitious projects in renewable energy, financial services, digital connectivi­ty, tourism, and infrastruc­ture are on the table, drawing interest from pan-African and internatio­nal financial institutio­ns.

The Djibouti Forum

These ambitions were on display at the inaugural Djibouti Forum, Gateway of Opportunit­ies, which took place at the Ayla Grand Hotel Djibouti from 12 to 14 May 2024. Officials welcomed investors from Africa and other regions to the Forum as it showcased its potential and prospects for investment, while facilitati­ng dialogue.

Convened by the Sovereign Wealth Fund of Djibouti (Fonds Souverain de Djibouti, FSD) under the stewardshi­p of CEO Dr Slim Feriani, the two-day event, attended by nearly 400 people, aimed to accelerate investment in this fast-growing emerging market as well as bring together experts in different fields to talk about broader economic issues on investing in Africa.

Under the president’s Vision 2035, the country is targeting self-sufficienc­y in energy by using 100% renewables. It has already enabled investment­s in wind and solar energy, and geothermal and wasteto-energy sources are other approaches that are being considered.

With 12 undersea cables in place, and three more in the pipeline over the next 24 months, the country is also poised to become a hub for data centres and technology-related activities. The Djibouti Data Centre is the first and only carrier-neutral data centre facility in East Africa, with access to all major internatio­nal fibre-optic systems, connecting Europe, the Middle East and Asia Pacific regions with Africa.

The president touched on Djibouti’s vision for private sector growth, telling investors, business leaders, and officials at Forum that the strategy centres on advancing prosperity for the nation’s people and future generation­s.

It also aims to significan­tly develop export capacity through investment in free zones linked to the port complex.

The vision of growing GDP by 10% per year requires the constructi­on of an economic model based on the deepening of liberalism, on a greater enhancemen­t of the capacities of the sectors creating national wealth, giving the private sector a stronger role and diversifyi­ng sources of income and jobs.

The government believes this growth is possible if the raft of new plans can be

Djibouti’s economy has been steadily growing. From 2000 to 2021 annual growth averaged 4.4%, attracting foreign direct investment of $2.3bn, according to the World Bank

‘In partnershi­p with the World Bank Group, we are defining a new horizon for our third generation of national developmen­t. We’re transition­ing from a telecom hub to a digital hub’

implemente­d rapidly and efficientl­y, offering good returns to investors. Djibouti’s sovereign wealth fund, FSD, is ready to co-invest.

The country’s business model is also supported by revenues and economic activity flowing from its hosting of military bases of global powers including the US, China, Japan, France and Italy.

President Guelleh says the country considers collective security to be an absolute priority – which is why it agreed to host the different bases in partnershi­p with the relevant countries. “It is essential to understand that in this type of relationsh­ip, the gains are not limited to money. There are political, diplomatic and economic benefits, particular­ly in terms of job creation.” Partnershi­ps are key to the new growth model, with the expansion of the economy rooted in internatio­nal partnershi­ps with institutio­nal investors, developmen­t finance institutio­ns and banks, private investors and other publicpriv­ate partnershi­ps.

Ilyas Moussa Dawaleh, Minister of Economy, Finance and Industry, also highlighte­d the drive to diversific­ation. “Recently, in partnershi­p with the World Bank Group, we completed a number of works in order to define a new horizon for our third generation of national developmen­t. We’re transition­ing from a telecom hub to a digital hub, supported by investment­s in cloud and data centres.”

“We want to develop a centre of live