A long road

Drawing on its strategic position and, more importantly, its long-term ambitions, Djibouti has managed to preserve its independence and stability in a complex environment. With a very demanding land being transformed by projects and infrastructure and where social development is also a priority.

Mid-May in Djibouti. Temperatures are already soaring, hovering around 40°C and emphasising, if proof were needed, the extent to which the country is already on the front line of climate change. Despite the high temperatures, the city is firing on all cylinders. The first Djibouti Forum opened on 12 May, in the presence of President Ismaïl Omar Guelleh, Slim Feriani, CEO of the Djibouti Sovereign Wealth Fund (DSF), and a host of participants from all over the world. The event was held in the brand new five-star Ayla hotel, owned by an Emirati chain. As Djibouti city expands, so do the construction sites. One of the core transformations is the Business City project. Launched in 2021 and scheduled to last at least a decade, this project, a strategic partnership with China Merchants Group, involves a $3 billion long-term investment that is set to move Djibouti into the future. It’s a ‘Port-Park-City’ concept, integrating ports, industrial parks and services, that will strengthen Djibouti’s position the key hub between Asia, Africa and Europe. The first tangible results are already visible. Not far from the old port (destined to be dismantled), the Red Sea Global, inaugurated in 2022, offers an international hotel (with one of the continent's best Chinese restaurants) and an exhibition and conference centre.

Since Ismaïl Omar Guelleh came to power, a little over twenty years ago, the country has changed fundamentally. This fragile and impoverished piece of pastoral Africa, plagued by ethnic conflict, has become an emerging economy. The city-country has entered the world of globalisation. Its four ports (SGTD Doraleh, DMP, Goubet, and Tadjourah) are among the most modern complexes in the world. Then there's the Djibouti International Free Trade Zone (DIFTZ), the largest free trade zone in Africa, covering an area of 4,800 hectares, as well as a new railway line linking Djibouti to Addis Ababa. Growth has kept pace with ambition. Between 2000 and 2022, GDP almost quadrupled. Per capita income has risen from less than $600 in 1999 to $3,425 in 2021 (+350%).

The economic vision also focuses on nation-building and preserving stability in a particularly troubled region. Djibouti is a country that is both young (it gained independence in 1977) and the product of a long history of transhumance, caravans and ethnic diversity. In recent years, it has had to overcome internal conflicts and transform what was for a long time the ‘territory of the Afars and the Issas’ into a single Djiboutian community.

Located in the heart of the Horn of Africa, opposite the Arabian Peninsula and Yemen, sandwiched between the almost totalitarian Eritrea to the north, the unstable giant Ethiopia to the west and the fractured Somalia to the south, the country has managed to preserve its independence and sovereignty, and offer a precious space where peace can prevail. By relying on its admittedly unique geostrategic position, it has also skilfully played its role as a mediating power, forging complex diplomatic and military alliances (the French, Chinese and Americans live side by side in this small territory of 23,200 km2), and carving out a significant diplomatic space and influence [see the interview with the Minister of Foreign Affairs, Mahamoud Ali Youssouf, pages 52-55].

Weathering crisis after crisis…

​​​​​​​A country that is little-known, Djibouti is too often reduced to a caricature of a ‘garrison country’. As we can see, its trajectory is far more ambitious. Yet the last few years have been particularly demanding. First there was the Covid pandemic and the global disruptions that followed. Then the war in Ukraine and its repercussions (particularly on food costs, for a country with no agriculture or arable land). And finally, today, the war in Gaza and the threats posed by the Yemeni Houthi rebels to the Bab el-Mandeb strait, one of the most strategic routes for world trade. It's a crisis that is having a direct impact on the country's economy.

…and soaring towards growth

Yet Djibouti is resisting, adapting and continuing to invest. The port is diversifying into transhipment and ship repair [see pages 46-51]. Projects such as the Damerjog industrial park, with its new oil jetty, are part of a move up the value chain [see pages 60-63]. Despite the challenges and dangers, Djibouti remains one of the key gateways to the Red Sea and East Africa. The natural gateway to Ethiopia and the Horn of Africa. A unique place to trade, store, forward, resupply, with an open economy and a freely convertible currency.

This rapid growth in logistics and port services, combined with the needs of the local population, has led to a considerable increase in the demand for energy. The country is a net importer, particularly via Ethiopia. Short-term requirements are estimated at over 1,000 MW (compared with 605 MW at the end of 2019). Against a backdrop of climate urgency and as part of Vision 2035, the Head of State has set himself an ambitious yet realistic target: to cover 85% of the country's needs with renewable energy. The first step, and a truly historic moment, will be the inauguration of the 60 MW Grand Bara wind farm in September 2023 [see pages 66-67]. It's a roadmap for building a competitive contemporary economy. However, as is the case in all emerging countries, it must also and above all make Djiboutians richer across the board, by enabling better redistribution. Despite the growth and transformation achieved over the past two decades, poverty remains a major national challenge. Extreme poverty still affects just under 20% of the population. And the middle class is fragile. One of the keys to the future will be employment and training. Getting more children into school, particularly girls, especially in the hinterland, emphasising technology and university courses, encouraging the development of a private and commercial sector outside ports and logistics, investing in new activities such as tourism.

And also, as has been said, in renewable energies. This new stage will certainly be arduous. However, the people of Djibouti have shown that they have faith. They have not come this far on their own, in a dry country with no water and few resources. Above all, they have had to believe in themselves, and their country, almost against all odds.