Djibouti's Strategic Location and Chinese Investments Propel It to Regional Hub Status

Djibouti, located at the crossroads of Africa, Asia, and Europe, is on the brink of becoming a regional hub for logistics, finance, tourism, and information and communications technology (ICT). This transformation is largely driven by substantial investments from China, focusing on key infrastructure projects.

Among the most notable projects is the Doraleh Multi-Purpose Port (DMP), built by Chinese enterprises and officially opened in 2017. The port boasts an annual design capacity of 7.08 million tonnes of cargo and 200,000 TEUs in container capacity. This port has significantly boosted Djibouti's cargo handling capabilities.

Another critical infrastructure project is the Ethiopia-Djibouti Standard Gauge Railway. This 752-km electrified transnational railway connects Djibouti's ports to Addis Ababa, the Ethiopian capital, enhancing regional connectivity and streamlining cargo transportation.

Djibouti's Vision 2035 development blueprint aims to diversify the economy beyond logistics and ports. The plan focuses on creating an attractive investment climate across various sectors, including finance, tourism, and ICT. The goal is to leverage Djibouti's strategic location and socio-economic stability to attract international investments.

Why this matters: Djibouti's emergence as a regional hub has significant implications for global trade and economic development. The country's ongoing infrastructure development and economic diversification will likely have a profound impact on the region's economic terrain and potentially reshape global trade routes.

Tourism is another area where Djibouti sees significant potential. The country is investing in renewable energy sources like wind, solar, geothermal, and waste-to-energy, aiming to become a digital economy hub in the region. The Djibouti Data Center, one of the first data center facilities in East Africa, is a demonstration of these ambitions.

China's investment has been instrumental in Djibouti's development. Projects like the DMP, the Ethiopia-Djibouti railway, and the Djibouti International Free Trade Zone (DIFTZ) have been crucial. Slim Feriani, CEO of the sovereign wealth fund of Djibouti, noted, "Our partnership with China goes a long way back and their support in upgrading our logistics such as ports and railways has been invaluable in our efforts to reach the next level. "

The impact of these investments is evident. Cargo volumes passing through Djibouti increased by 31% in the year to the end of September 2023. Feriani highlighted Djibouti's strategic advantage, stating, "Our biggest advantage is the strategic location of the country, controlling the entry into the Gulf of Aden and the Red Sea, and linking the African mainland to the Middle East and beyond."

Djibouti's cooperation with China and its strategic location are driving the country's economic diversification and development ambitions. The country continues to develop its infrastructure and diversify its economy, it is well on its way to becoming a regional hub for logistics, finance, tourism, and ICT.

Key Takeaways

• Djibouti is becoming a regional hub for logistics, finance, tourism, and ICT.
• China's investments in infrastructure projects are driving Djibouti's transformation.
• Doraleh Multi-Purpose Port and Ethiopia-Djibouti Standard Gauge Railway boost regional connectivity.
• Djibouti's Vision 2035 aims to diversify the economy beyond logistics and ports.
• Cargo volumes through Djibouti increased by 31% in 2023, driven by strategic location and infrastructure development.