A VIEW FROM THE EXPERTS
The Forum was attended by a number of high-level experts, including renowned economist Charlie Robertson, head of macro strategy at FIM Partners UK. He noted that Djibouti was one of the most improved countries on the continent when it comes to literacy rates, citing this as a strong reason to be optimistic about the nation’s long-term economic prospects.
“The literacy level has moved from too low to escape poverty to [there being] enough children in secondary school to provide human capital for growth,” he said. “You cannot grow sustainably if literacy levels are below 40%.” Djibouti’s levels are encouraging, he said, while adding that more still needs to be done.
Djibouti’s security profile is an outstanding strength, given the volatile neighbourhood it finds itself in, between Somaliland, Eritrea and Ethiopia and a short distance from conflict-ridden Yemen.
The international military bases contribute significantly to counterterrorism efforts, maritime security, and regional stability. “Djibouti is not just stable itself, but it helps spread stability. I can’t think of any place in the world where the Americans and Chinese coexist as well as in Djibouti,” said Robertson.
The ease with which foreign investment can be repatriated and the currency’s peg to the US dollar were also cited as key selling points for the country given the recent volatility in the foreign exchange markets of many African economies. “The currency actually matters. This currency has been stable since 1973.” Robertson shared a platform with Dr Donald Kaberuka, co-founder of Southbridge Group and former president of the African Development Bank, who said that Djibouti and other African countries should not pursue economic growth alone, but also focus intentionally on transformation, job creation, income generation, domestic savings, diversification, and overall development.
“If you are able to set up the right kind of sovereign wealth fund you can make it an instrument of economic transformation,” he remarked, adding: “The concept of the fund here [in Djibouti] is right. It’s not simply about growing the size of the fund; you have to think about where you invest, how you invest and the productivity of that investment. That will be the sign of its success.”
He cited the example of Vietnam as something to strive for. In just one generation the country increased its GDP from $14bn to $500bn. Education played an important role, he maintained, emphasising that it is the quality of the output from education that is critical, rather than simply the number of children at school.
Kaberuka said that the world was going through many crises and it is important for a small open economy always to be prepared, especially when the international system is so uncertain. “African countries need to go back to basics because you don’t know which crisis is coming next. If you prepare, you build the necessary resilience.”