Djibouti to unleash the economic potential of Africa

Djibouti, strategically positioned at the mouth of the Red Sea and the gateway to the Suez Canal, is undergoing a remarkable transformation, leveraging its geographical advantage to become a pivotal player in global trade. Through significant investments totalling over $1.2bn, spearheaded by entities like the Djibouti Ports and Free Zones Authority (DPFZA) and the Great Horn Investment Holding (GHIH), the country is modernising its infrastructure to unlock economic potential not only for itself but for the entire African continent. 

The cornerstone of Djibouti’s development strategy lies in its state-of-the-art port facilities. The Société de Gestion du Terminal à Conteneurs de Doraleh (SGTD), ranked as the top terminal in Sub-Saharan Africa, serves as a vital regional hub for transhipment, facilitating trade for landlocked countries. Meanwhile, the Doraleh Multipurpose Port (DMP) boasts cutting-edge equipment to handle various cargo types. Both the SGTD and DMP are connected to the railway, enhancing regional connectivity. 

In the realm of maritime services, Djibouti has made significant strides with ventures such as Red Sea Bunkering (RSB) and the Djibouti Shipping Company (DSC). RSB, a subsidiary of GHIH, provides a range of services, among them on-shore fuel to vessels, emphasising quality, safety, and environmental sustainability. Similarly, DSC, Africa’s first liner services provider, facilitates efficient transport solutions, reducing transit times and enhancing reliability for importers and exporters.

The Free Trade Zone

The Djibouti International Free Trade Zone (DIFTZ) epitomises Djibouti’s aspiration to emerge as a key global trading hub. Supported by significant investments and strategic partnerships with international entities, DIFTZ endeavours to establish itself as the largest free trade zone on the African continent. 

The initial phase, encompassing 240 hectares and underpinned by a $370m investment, has garnered substantial attention globally. With over 367 companies already operating within its confines, DIFTZ has earned prestigious recognition: it won the fDi Inelligence Global Free Zones Awards of the Year in 2019. Upon completion, spanning an extensive 4,800 hectares, DIFTZ will solidify its position as Africa’s preeminent free trade zone.

Businesses operating within DIFTZ benefit from favourable conditions, facilitated by Djibouti’s currency being pegged to the US dollar. These incentives include tax exemptions and preferential policies tailored for COMESA, AGOA, and ACP, enabling duty-free access to US and EU markets under specific criteria. 

With its strategic location, favourable incentives, and access to key markets, DIFTZ offers unparalleled opportunities for businesses worldwide, driving economic growth and industrial expansion across the region. 

Efficient port operations

Djibouti boasts modern ports and the advanced Djibouti Port Community Systems (DPCS), facilitating efficient operations through a “one stop shop” approach. The DPCS streamlines import and export processes, operating round-the-clock in a paperless environment to facilitate seamless coordination across air, sea, land, and rail trade for businesses in Djibouti and globally. Djibouti has embarked on developing a Sea-Air logistics transport model since October 2021, complementing its existing land corridors. 

This multimodal approach aims to expedite the flow of goods to destination countries, particularly benefiting landlocked and distant regions. By integrating sea and air cargo routes, Djibouti offers businesses a solution to reduce transit times significantly. This initiative underscores the value of time in commerce, emphasising efficiency and economic gains. “Sea-Air transport, via Djibouti, will save at least 8 hours by air and 5 days by sea, because not only is Djibouti on the maritime route, but most flights to Africa pass over Djibouti,” said DPFZA Chairman Aboubaker Omar Hadi.

Green energy ambition

Djibouti aims to become the first African country to use 100% green energy by 2035. This initiative comes in line with the “Djibouti Vision 2035” initiated by the president of the republic, Ismail Omar Guelleh. Red Sea Power (RSP), a consortium comprising the Djiboutian company Great Horn Investment Holding (GHIH) along with Dutch Financing for Development (FMO), Climate Fund Managers and Africa Finance Corporation (AFC), marked its entry into renewable energy when it completed the Ghoubet wind farm in 2023. 

Plans are already underway to expand this first wind farm, of 17 turbines, with an additional 45 MW, and to finance a transmission line to the northern region around Tadjourah and Obock. Furthermore, RSP is developing a solar-powered desalination plant which will provide local communities with an extra 7000 litres per hour of drinking water, crucial to their long-term development. 

Ship repair

Djibouti, because of its advantageous location on one of the world’s busiest sea routes, recognised the necessity for maintenance and dry-docking facilities. Consequently, Djibouti Ship Repair Yard (DSRY) acquired a floating dry dock designed and constructed by Damen Group. DSRY offers comprehensive services including repairs, overhauls, and conversions for both merchant and naval vessels, ensuring the effective maintenance of ships in the region.

Djibouti’s ambitious development projects, spanning port infrastructure, trade zones, technological advancements, and renewable energy initiatives, demonstrate its commitment to unleashing the economic potential of Africa. With strategic investments, international partnerships, and a vision for sustainable growth, Djibouti is poised to emerge as a key player in global trade and commerce, driving prosperity and progress across the continent.