BY FUAD ABDIRHAMAN
Djibouti is fast becoming a gateway to the region; the tiny nation located on the further end of the horn of Africa has seen major investments on their ports in recent years and has recently added to its projects the construction of multibillion free trade zone considered to be the biggest in the continent.
The mega free trade zone, launched in early July, intends to capitalize on its landlocked neighboring Ethiopia growing economy. Djibouti is roughly 25 times less than the size of Kenya, whose population is also 48 times bigger.
Investors, mainly the Chinese government and her associates have poured billions of dollars into the tiny African nation. The Chinese, with an already established military base, has recently invested in the ports and are behind the construction of the free trade zone, which is estimated to cost $3.5 billion. The zone will be jointly operated by Djibouti Ports and Free Zones Authority and China’s Merchants Holdings Company.
Once completed the free trade zone will focus “on trade and logistics, export processing, business and financial support services, as well as manufacturing and duty-free merchandise retail,” said Aboubakar Omar Hadi, chairman of the Djibouti Ports and Free Trade Zone, adding that the project will be a necessity to region.
“We are building a global, modern and sustainable trade hub for the coming decades. Djibouti’s strategic location makes it an important gateway to dynamic African markets. Our strategic location and world-class facilities have seen Djibouti’s importance as a trade hub recognized globally,” Mr Hadi says.
Djibouti is situated at the mouth of the Red Sea, the gateway to the Suez Canal connecting Africa, Asia and Europe. The Port of Djibouti is a gateway to one of the fastest growing regions of the world with 30, 000 ships transiting the port each year.
Djibouti handles almost all foreign trade of Ethiopia, this will be strengthened with the construction of the free trade zone that saw the Prime Minister of Ethiopia attend
Kenya, it is predicted, is going to lose big to the tiny country in port matters, which has already taken away Ethiopia from the matrix of Kenya’s port activities.
In a statement, the prime minister of Ethiopia congratulated Djibouti for the construction of the mega project and said he wants to see “harmonized working hours, competitive port tariff, single clearance document, OSS, joint investment in port infrastructure and improved road link.”
Djibouti currently handles almost entirely the foreign trade of Ethiopia, this will be strengthened with the construction of the free trade zone where its launch saw the Prime Minister of Ethiopia and various other regional trade stakeholders in the region attend. The country is optimistic that the project will increase trade opportunities in the region.
According to the President of Djibouti, the zone will be a hope for thousands of young jobseekers. The President also said, ironically, that the expansion of the port and the construction of a railway line between Djibouti and Ethiopia would offer transit logistics for Kenya’s imports and exports.
There is also construction of fuel pipeline running from Djibouti to central Ethiopia, which is estimated to have a transporting capacity of 240,000 barrels.
The success of the Port of Djibouti is attributable partly to a strategic location, making it one of the most favorable destinations for international ships. lt is located along the busiest shipping route besides also having a presence of military facilities of the United States, France, Japan amongst other powerful countries.
Djibouti’s significance in regional trade cannot be ignored and neighbours including Kenya, which stands to lose more of its clout, are not taking it lightly. Already, Kenya, in its charm offensive has up-scaled its interest in the tiny nation with President Kenyatta meeting his counterpart, Ismaïl Omar Guelleh twice in less than six months, signing a number of trade agreements.