The second Djibouti forum is in the understatement of the current geopolitical mixed chaos, which is what the apocryphal Chinese curse is a “interesting era.” However, the Djibouti government and its sovereign wealth fund, which organize the event from April 6th to 8th, need to congratulate them on their ignoring outside crying and sticking to the calendar. Anything that might rock trees for the power of the world, Djibouti and, by extension, Africa will go their own path to suit their own needs, if they can adapt from Trump's vocabulary.
“Djibouti's geographical status is the gem of the crown,” said Mohamedus Surafuiqbal, chairman of Malaysia's Waafi Bank and one of the most respected analysts in the Association of Southeast Asian Countries (ASEAN) region.
Indeed, it sits at the junction of the Indian Ocean and the Red Sea, it overlooks one of the busiest sea levels in the world. It is estimated that 30% of global goods to Europe will pass here.
Iqbal considers many similarities between Djibouti and the factors that led to the emergence of Southeast Asian countries such as Malaysia and Singapore as the major global economic forces. He considers a series of synergies that can make Djibouti a gateway to the market of over 1.5 billion Africans and create new dynamic economic ties in the South.
No matter how the geopolitical card falls, we can be certain of one thing. Trade remains a major geopolitical concern. The importance of Babu el-Mandev, the “gate of tears” at the entrance to the Red Sea, increases rather than decrease, with the passage of an estimated 40,000 ships each year.
Already at various ports of the World Bank, the growing demand for transport and transships at various ports in Djibouti, which have been described as “the most sophisticated port complex in the world,” is already approaching capacity. The largest new dry dock on the continent adds its capabilities and also generates additional demand.
But the country has more of it. As detailed in the next page, it hosts a collection of some of the world's most important submarine cables, and has five military bases in the United States, China, Italy, Japan and France. Given its location adjacent to one of the most unstable yet valuable regions in the world, it is easy to understand why Djibouti has become so attractive as a military base.
Since 1949, the currency has been fixed in the US dollar, which rejects all the building blocks needed to move to financial hubs in most African countries and regions.
Building the foundation
Djibouti gained independence from France in 1977, but had to survive a devastating civil war between 1991 and 1994. From the end of the civil war, country leaders began a slow, often frustrating process that allowed them to lay their economic foundations.
Today, under President Ismail Omar Grele (often called the IOG), it enjoys its reputation as one of the most politically stable countries in Africa.
But there is still much to do to provide employment opportunities for the rise of youthful demographics. The current unemployment rate is around 30%. The country's social needs include the vast majority of affordable housing. Cheaper power; water shortage; overhangs in external debt. and general modernization and upgrade of the process and standard of living.
That said, the country's fundamentals are solid, with various agencies working to close the gaps in government services and improve efficiency.
Following a visit to the site led by Esther Perez Luis in December 2024, the IMF said: “Djibouti's maritime-dependent economy demonstrates regional resilience to conflict. Growth for the fiscal year 2024 will be endured by transport companies as they promote transportation.
The report concludes: “The authorities continue to be committed to policies that promote macroeconomic sustainability and increase the credibility of their policy frameworks. Efforts include promoting debt negotiations with key creditors, amending military infrastructure contracts, strengthening the movement of habitual obligations to Inland revenues, and leveraging dividends from profitable state-owned companies.”
Eerie similarities
The establishment of the Djibouti Sovereign Wealth Fund (FSD) in 2020 could prove to be a stroke that will catapult Djibouti as a major economic force over the next decade. It has a nice similarity with the Singapore Wealth Fund, which can undertake most of Singapore's income and job generation projects and become a magnet for capital from around the world.
Djibouti abandoned the former European city planner and chose to dress for Singapore's urban planning. This, following the Rwandan lead set, transformed Kigali from a silly dusty mountain into a charming, clean city.
New hotels, high-end housing and port expansion have already changed the city of Djibouti city skyline. “The construction and public works sectors are thriving in the country,” the World Bank said.
The FSD, led by Slim Feriani, works in collaboration with progressive government policies to calibrate schools and expand and diversify the economy with the power of the private sector, identifying these basic sectors for development. Renewable Energy; Finance; Digital; and Logistics (see page 20).
A stepping stone to the vast opportunities of the continent
He hopes that Canny investors at the Djibouti Forum will see for themselves the country's potential, not just within their own geographical space, but as a springboard to the vast opportunities of the continent.
Investment influencers such as Malaysian IQBAL agree. “The true market in Djibouti is not citizens, but the 1.5 billion Africans reachable via the AFCFTA (Africa Free Trade Area),” he writes.
He argues that Southeast Asia's expertise is seamlessly in line with Djibouti's undeveloped possibilities. He says he is summarizing the dynamism of Southeast Asia and African aspirations and seeing the creation of a new global economy bond. Slim Feriani emphasizes the message, “Today's investment in Djibouti means getting a head start for tomorrow.”
