Chinese engagement in Djibouti's economic transformation in a nutshell

Source: Xinhua| 2020-01-10 18:35:02|Editor: mingmei
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ADDIS ABABA, Jan. 10 (Xinhua) -- As Djibouti envisaged to harness the huge economic potential attributed to its strategic geographic position, Chinese engagement has propelled the country's aspiration of becoming an important economic, trading and marine logistics hub connecting three continents along the Red Sea.

From the successful completion of an international free trade zone to state-of-the-art port infrastructure and Africa's first fully-electrified transnational railway that stretched 752-km all the way from the Djibouti Port to the landlocked Ethiopian capital Addis Ababa, Chinese engagement is widely considered as a connecting bridge to fulfill the Red Sea nation's socio-economic transformation.

Here are some latest developments on the major Sino-Djibouti cooperation projects in the Horn of Africa nation.


Courtesy to its strategic geographic position, Djibouti, located along the coast of the Red Sea and the Gulf of Aden and linking three continents that are Africa, Asia and Europe, is poised to serve as a key maritime corridor and trading hub thanks to the Chinese-built Djibouti International Free Trade Zone (DIFTZ) as well as various other modern infrastructure projects.

With a planned construction area of 48.2 square km, the free trade zone occupies one-tenth of the country's available land area and has attracted more than 20 companies that have decided to settle in the zone, which incorporates a tall modern office building, about 70,000 square meters of warehouses and 65,000 square meters of storage yards have also been completed.

Being operated by a joint venture with investment by Chinese enterprises, including China Merchants Holdings and Dalian Port Corp Ltd, as well as the Djibouti Ports and Free Zone Authority, the DIFTZ has attracted enterprises ranging from commerce and logistics to processing sectors.

Economic experts and analysts also describe the Chinese-built international free trade zone, which started construction in January 2017 and inaugurated in July 2018, as a turning point injecting the much-needed economic development momentum in Djibouti, a country with a population of nearly 1 million.

"The DIFTZ together with other vital development infrastructures in Djibouti has become a crucial junction linking other African countries involved in the China-proposed Belt and Road Initiative (BRI), eventually transforming the Red Sea nation into a marine logistics hub in Africa and beyond," Costantinos Bt. Costantinos, who served as an economic advisor to the African Union (AU) and the UN Economic Commission for Africa (ECA), told Xinhua in a recent interview.

The vital economic infrastructure has also won the acclaim of Djibouti's neighboring countries, in which the Intergovernmental Authority on Development (IGAD), an eight-member East African bloc, had also lauded the Chinese-built infrastructure as "a clear demonstration of regional economic integration that the member states have been working for."

The east African bloc, describing the 370 million U.S. dollar project to play "crucial" economic and employment roles in Djibouti and beyond the region, also hailed the project's successful completion as a "proud moment and milestone" in regional integration, and towards realizing the major aspirations of the IGAD free movement protocol and the African Continental Free Trade Area (AfCFTA) Agreement.

According to Djibouti's President Ismael Omar Guelleh, the importance of the Free Trade Zone extends beyond the IGAD region to the rest of the African continent, as it was also well articulated by President Paul Kagame of Rwanda, who noted that the vital infrastructure will not only serve Djibouti but wider regions of the African continent.


Recent figures from the Djibouti Ports and Free Zone Authority (DPFZA), a governmental body that administers and manages the Port of Djibouti, and several other facilities in Djibouti that also oversees the management of DIFTZ, the import-export endeavor through Djibouti ports has augmented in recent years, a milestone attributed mainly to modern infrastructure developments such as the Chinese-built Doraleh Multi-Purpose Port that was officially opened back in May 2017.

Aboubaker Omar Hadi, the DPFZA chairman, told Xinhua that the DPFZA had recorded over 41 billion U.S. dollars in exports and imports through Djibouti ports, stressing that the landmark achievement couldn't be achieved without developing proper infrastructure, such as sea ports and railway connections.

The Doraleh Multi-Purpose Port was constructed by the Chinese construction giant, China State Construction Engineering Corporation (CSCEC), and was regarded as the largest port project by Chinese construction companies in northeast Africa upon its completion.

The port, which was built with a contract amount of 421.7 million U.S. dollars and designed annual handling capacity of 7.08 million tons, is also CSCEC's first hydraulic project in Africa and its largest hydraulic project overseas by the time the port was inaugurated.

The project construction was officially started in August 2014 with great enthusiasm and commitment, in which Chinese construction workers overcame "tremendous difficulties" with the scorching heat of Djibouti and austere working conditions, and finished building the port in March 2017, which was eventually officially opened in May 2017.

The port has been also hailed by experts as a positive impetus in realizing the tiny Horn of African nation's development aspiration to harness its convenient geographic location of becoming an important link in the Asian, African and European markets, as well as a transport hub on the west line of the 21st Century Maritime Silk Road.

"Beyond providing Djibouti with an important maritime foothold and strength, the opening of Doraleh Multi-Purpose Port has brought new hope and drive of a greater economic development for Djibouti," Costantinos told Xinhua.


The socio-economically connected neighboring Horn of African nations Ethiopia and Djibouti presently mark the two years' operational anniversary of the Addis Ababa-Djibouti Standard Gauge Railway (also known as Ethiopia-Djibouti Railway), a 725-km Africa's first fully-electrified transnational railway.

The Chinese-built Ethiopia-Djibouti railway, which stretched all the way from Addis Ababa to Djibouti, officially commenced its commercial operations for both passenger and freight services back in January 2018, eventually connecting landlocked Ethiopia with ports in Djibouti.

Ever since the railway commenced its operations connecting the two countries, economic experts and analysts, as well as senior government officials from the two countries have hailed the vital development infrastructure's contribution in leveraging transportation needs of Ethiopia from Djibouti.

Speaking to Xinhua, Gedion Jalata, a senior advisor to the UN Development Programme (UNDP)'s South-South Cooperation initiative, stressed that the Addis Ababa-Djibouti railway has boosted the overall economic growth of both Ethiopia and Djibouti.

"The railway has the potential to boost regional integration between the two countries through the enhancement of trade and social interaction," said Gedion, who is also a former consultant to UNECA's Capacity Development Division.

"The railway has modernized the two countries transport infrastructure, and served as an economic belt by providing outlets to industrial products coming from various industrial parks in Ethiopia such as Adama, Hawassa and Eastern Industrial Parks with convenient and swift transportation to ports in Djibouti," added Gedion, who is presently serving as CEO of the Center of Excellence International Consult, an Ethiopian-based international consulting firm.

The Ethiopia-Djibouti railway, contracted by two Chinese companies China Civil Engineering Construction Corporation (CCECC) and China Railway Group Limited (CREC), is currently managed by a consortium of Chinese companies for a period of six years.

Tilahun Sarka, Director-General of the Ethiopia-Djibouti Standard Gauge Railway Share Company (EDR), told Xinhua that the modern fully-electrified railway "is a positive manifestation of the two countries' (Djibouti and Ethiopia) successful cooperation with China."

The railway has created a suitable transportation corridor for landlocked Ethiopia's import-export trade through Djiboutian ports, with 9 industrial parks out of a total of 12 Ethiopian industrial parks being situated along or with close proximity to the rail line, according to Sarka.


The ever-expanding China-Djibouti cooperation, among other economic sectors, has effectively enabled Djibouti to harness its demographic dividend, mainly through the creation of tens of thousands of decent jobs across various economic sectors.

According to recent figures from the Ethiopia-Djibouti railway management body, the railway during its construction had created in excess of 61,000 employment opportunities for Ethiopia and over 5,000 opportunities in Djibouti.

The railway, after its commercial operations back in January 2018, also created approximately 3,900 direct jobs for nationals of the two connected countries, while its indirect employment opportunities also estimated between 25,000 to 30,000 across various economic sectors, according to the railway's management contractor.

In addition to the tens of thousands of decent jobs created by the Ethiopia-Djibouti railway, Djibouti has been able to tap into various other Chinese-contracted development projects in terms of creating much-needed jobs for its working populace.

The DIFTZ, which was estimated to handle over 7 billion U.S. dollars' worth of trade during its first two years period, is in particular seen as instrumental in creating employment opportunities for Djibouti.

According to the Djibouti government, the Chinese-built free trade zone is expected to create combined employment opportunities well over 15,000 through its integrated manufacturing unit, warehouse facilities, an export processing area as well as service centers.


Chinese capacity development and knowledge transfer assistance to Djibouti, among other areas, also includes education and training opportunities targeting young Djiboutian youth across various sectors, knowledge transfer through the deployment of Chinese experts in Djibouti, as well as enabling Djiboutians in major technological developments.

Amid Djibouti's new technological initiatives involve the latest technological advancements that are not common in the country, China's capacity development engagement has proven vital in filling the technology gap.

The railway sector, which is regarded as a new technology to young Djiboutians who never had practical experience of modern electrified railway operation, has been in particular immensely benefited from Chinese capacity development and knowledge transfer assistance, as it enabled Djibouti's youth to acquire much-needed practical and theoretical knowledge and skills to master railway operations as they aspire to take over operation and management of Africa's first fully-electrified transnational railway from Chinese experts within the coming years.

Speaking to Xinhua, Sarka hailed the ongoing comprehensive knowledge transfer initiative for augmenting the capacity of junior Ethiopian and Djiboutian professionals in the railway sector.

According to Sarka, the Ethiopia-Djibouti railway is presently managed by Chinese experts for a period of six years, due to the shortage of electrified railway operation and management experience in the two countries.

Sarka, noting that experts drawn from the two Chinese companies that built the railway are currently undertaking all the maintenance, rail captaincy and control operations, said that efforts are smoothly progressing to transfer rail captaincy to local engineers.

"Our plan is to fully take over rail captaincy by local captains next year, then maintenance operations and finally control unity activities." Sarka told Xinhua.