Country FilesEast & HornCountry Profile 2014: DJIBOUTI

Sat,20Jan2018

Posted on Thursday, 06 February 2014 11:38

Country Profile 2014: DJIBOUTI

Irresistible strategic pull

Djibouti is capitalising on its geography, at the strategic pinch point in the Red Sea, controlling vital shipping lanes and facing politically turbulent Yemen. Foreign sponsors perhaps turn a blind eye to the more egregious behaviour of the regime because of the strong support President Ismail Omar Guelleh provides for Western security operations.

 

 

TABLE OF CONTENTS:

Top Djibouti Companies

Top Djibouti Banks

 

theafricareport-djbouti-72dpiIrresistible strategic pull

The government is happy to facilitate operations against pirates and terrorists

Regional dynamics in transport, power and water stimulate the business outlook

Djibouti is capitalising on its geography, at the strategic pinch point in the Red Sea, controlling vital shipping lanes and facing politically turbulent Yemen. Foreign sponsors perhaps turn a blind eye to the more egregious behaviour of the regime because of the strong support President Ismail Omar Guelleh provides for Western security operations. A proposal to have a NATO office in Djibouti as part of the so-called ‘Ocean Shield’ fight against Somali piracy is just the latest in a string of defence cooperation agreements.

At the US camp Lemonnier, purchased by the Americans from the French, a regular queue of Predator drones used to take off, mostly prosecuting the US war on terror in Afghanistan, but also raining death down on targets in Yemen and Somalia. The drones now depart from what is described as a “more remote location” – possibly some kind of floating facility–after official complaints about “aviation traffic issues”.

PORT OF ENTRY

Increasingly, it is Djibouti’s commercial geography that is generating cash for the Guelleh regime. First among a series of new ports along the shore, Doraleh port was fully upgraded by Dubai’s DP World in 2009. Now two more terminals are being built, one for livestock, one general purpose,with a 4km quayable to process 29m tons of cargo a year. China Merchants Group is funding the construction.

It has not all been plain sailing. The African Development Bank’s Legal Support Facility has helped the government renegotiate its contracts with DP World, which was seen as too favourable for the Dubai company. Meanwhile one of the hottest scandals of 2013 was the government’s suit in the London courts against Abdourahman Boreh, the ex-chairman of the Djibouti Ports and Free Zones Authority, who worked closely with DP World and other companies. The government was seeking to freeze his foreign assets, estimated at nearly $80m.

Since the parliamentary elections in early 2013, the regime has been cracking down on the opposition, with the Union pour le Salut National spokesperson jailed twice, each time for two months, since the poll. However, the ruling Union pour une Majorité Presidentielle has subsequently opened negotiations with the party. Opposition concerns are fuelled by rampant inequality. The Arab Spring was felt in Djibouti, with riots in early 2011.

President Guelleh, who came to power almost 15 years ago after succeeding his uncle in 1999, changed the constitution in 2010 to allow himself a third term in office. He has said, “In 2016, I will go. This time, I can swear”.

GAP IN BENEFITS

The IMF, which has generally been supportive of the government’s macroeconomic policy, has been more critical recently, saying that the regime has done little to relieve wide spread poverty and that the bulk of the population hardly benefits from recent economic growth. In response, the government has set out plans for a new social support system, but 42% of the population lives in extreme poverty and 48% of the labour force is unemployed.

Still, with confident forecasts of continued growth of 5% a year, regional dynamics help the over all outlook. Astrong symbiotic link is developing between Addis Ababa and Djibouti City, pleasing the proselytisers of African economic integration. Ethiopia’s only access to the sea is via Djibouti, and trucks crawl bumper to bumper along the recently renovated high way. After numerous false starts, a rehabilitated railway may yet link the two capitals once again, and there is even a plan to create a direct route from Tadjourah to the Tigrayan city of Mekelle in Ethiopia.

A 280km electrical interconnection will allow the Ethiopian Electric Power Corporation to sell Djibouti up to 60MW of power, earning around $1.5m a month in the process. Djibouti’s own energy bills should come down too, freed from reliance on generators and thermal power plants, which should dampen both national and household inflation. It is not just electricity but water that is flowing across the border. In January 2013, Djibouti signed an agreement to purchase freshwater from the Ethiopian highlands to compensate for its own arid conditions, increasing its water supply from 20,000m3 to 120,000m3.

Top Djibouti Companies 

No companies from Djibouti featured in The Africa's Report's Top 500 Companies in Africa 2013.

 

Top Djibouti Banks

 

No banks from Djibouti featured in The Africa's Report's Top 200 Banks in Africa 2012.

 



 



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