The small coastal nation, located at the mouth of the red sea, hopes it can one day become Africa’s heart of shipping.
Kenya, Mozambique, South Africa, and Tanzania already have much larger and busier ports. Despite this, Djibouti is aiming to become a gateway to Somalia, South Sudan and the Great Lakes region. Over 90% of the goods handled by Djibouti Port go to Ethiopia, but they hope to broaden this scope to serve other landlocked countries.
Port developments in Africa are of key interest right now, particularly on the east coast.
- Kenya is building a second major port in Lamu while continuing the expansion of the port in Mombasa
- Tanzania began construction in June 2018 on a $10bn port in Bagamayo
- Expansion began on a port in Somaliland in October 2018, to help cater for much larger vessels
Foreign investments have made these projects possible. China has taken interest in Tanzania and Djibouti, while Dubai is interested in the port expansion in Somaliland.
A 50 sq km (31 sq miles) Chinese-built free trade zone began construction in Djibouti in July 2018; the zone will house manufacturing and warehouse facilities, an export-processing area, as well as a services center. It is expected to handle $7bn (£5.3bn) worth of trade within 2 years, as well as create 15,000 jobs. The project is part of China’s multi-billion dollar Belt and Road Initiative, which is constructing a “21st Century Silk Road” in over 60 countries.
Djibouti currently has a GDP of only $1.84bn (according to the World Bank), and 2/3 of its debt is now owed to China. The nation is facing some significant challenges, such as bottlenecks on its roads and railways. As well as the fact Ethiopia is now warming relations with Eritrea, which could mean competition for Ethiopian business from Eritrea’s Massawa port.
Aboubaker Omar Hadi (Chairman of Djibouti Ports and Free Zone Authority) said:
“Everything we are building in Djibouti is demand-driven… our ports are quickly becoming full with the volume of business, so we are not going to have any issue with paying back these loans.”
Western countries have shown investment interest, but Hadi is sceptical and says he prefers working with the Chinese as “they have a different attitude… they believe in Africa… they know that Africa is the richest continent in the world, but with the poorest people in the world… so there is a win-win opportunity going on between Africa and China that westerners have not seen”