Tiny Djibouti aiming to be global military, shipping center (Part 2/2)
Posted Date: Monday, April 9, 2018
The country’s ports now have a total handling capacity of 18 million tons per year, officials said, and the new Doraleh Multipurpose Port, a $590 million joint project between the ports authority and China Merchants Port Holdings opened in May last year, is already working at full capacity. It is a separate entity from the Doraleh Container Port.
Now officials are pursuing a new project called the Djibouti International Free Trade Zone, expected to be the largest of its kind in Africa.
“Once complete it will span an area of 4,800 hectares (11,860 acres), following a total investment of more than $3.5 billion,” the ports authority chairman said. The first phase is expected to be complete by the end of the year.
Officials hope the ambitious infrastructure projects will not only raise Djibouti’s global image but also help it pay off significant debts.
During Tillerson’s visit, Foreign Minister Mahamoud Ali Youssouf acknowledged that Djibouti’s debt totals roughly 84 percent of its GDP, most of it to China. “The burden of debt is there, we are aware of it,” he said. “But let me tell you that it is so far manageable.”
One sign of investor confidence is whether China’s commercial banks begin lending to Djibouti as well, said Jyhjong Hwang, senior research assistant at the China-Africa Research Initiative.
Djibouti’s officials anticipate that the demand for their ports will grow as more African nations expand their economies. They also dismissed concerns about a recent deal by DP World, Ethiopia and Somalia’s semi-autonomous region of Somaliland to develop and manage the Port of Berbera there, seen by some as another reason for Djibouti’s seizure of the container terminal from DP World.
“Competition will make the region more attractive. East Africa’s economies are growing fast, and there is a clear demand for Djibouti’s infrastructure to support this growth,” the ports authority chairman said.
Djibouti’s residents said local business is booming as a result of the growing international military and shipping interest, despite the country’s unemployment rate of nearly 40 percent, and construction sites and new roads dotted the city. Economic growth has attracted entrepreneurs from India, Yemen, Gulf nations and elsewhere.
“Our company provides a fleet of cars for the army bases and we are really benefiting from it,” said Nour Omar, one of Djibouti’s best-known businessmen and general manager of local import and distribution business BSH Holding. “We aim to expand our services following their demand.”