What is Djibouti’s long-term investment strategy?
ABOUBAKER: Our strategy focuses on high value-added investments that support inclusive growth and create jobs. Djibouti has set the objective to become a middle-income nation by 2035, which we are convinced is achievable, provided that economic and social policies rationally target all citizens. To this end, Djibouti must continue to work to diversify its types of investments and investors.
What economic developments demonstrate Djibouti’s efforts to diversify investment?
ABOUBAKER: The Djibouti International Free Trade Zone, inaugurated on July 5, 2018, will host companies wishing to invest in Africa. Since dependence on a state-run or a multinational company would lead us into a monopoly situation, Djibouti is aiming for a diversification of its economic partnerships. The Damerjog gas terminal and other flagship projects are expected to create competition among investors, and it is our responsibility to ensure it is fair and not preeminent. The gas terminal project would have a positive effect on the economy, offering new opportunities for diversification, reducing energy costs and creating jobs.
How would you assess the one stop shop initiative after one year of operation?
ABOUBAKER: Our assessment is largely positive, and it has exceeded expectations. This is mainly due to the new framework of close collaboration that has been drawn between users of the one stop shop, thanks to a secure computing platform and an integrated management information system. In the same direction, the National Investment Promotion Agency carried out a series of reforms in alliance with partner institutions. This has led to a reduction in business start-up costs; shorter lead times and lower prices for building permits and the transfer of ownership; better connection to electricity; free affiliation to the National Social Security Fund, exemption from a business licence for the first three years; and better protection for creditors and minority shareholders. These synergies created by the agency go hand in hand with the harmonisation of various institutions involved in the single window, adding to Djibouti’s investment attractiveness.
According to the World Bank’s “Doing Business 2019” report, Djibouti is among the top-10 countries in the world with the most improved business environment in 2018. These results are consolidated by the increasing number of businesses being created. Before the one stop shop was launched, there was an average of 400 companies in the country. In 2017 around 300 new businesses were registered, and in the first half of 2018 alone there were 699 enterprises registered.
How important is it for Djibouti to forge trade links with its regional neighbours?
ABOUBAKER: Tunisia recently joined COMESA, showing that free trade has the potential to become very influential in Africa. Our closest neighbours – namely, Ethiopia, Kenya and Uganda – account for one-fifth of COMESA’s GDP. Nearly 90% of Ethiopian trade transits through the Port of Djibouti, which works as a bridge between Asia and Africa. Moreover, Djibouti enjoys modern port infrastructure, while other regional countries possess different economic assets. The more these countries participate in the development of trade, the more Djibouti will follow and benefit from their dynamic. In this context, lifting Customs barriers for COMESA states would be a boon for the region. Djibouti could take full advantage of this common market, and the largest free zone in Africa could become an exclusive business platform. Lastly, Djibouti’s geostrategic position is a peremptory asset that would allow for the free movement of goods and services between COMESA member countries. It would create a market for 500m people with a combined GDP of $12bn.
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