Interview: Mahdi Darrar Obsieh
What measures can be taken to encourage foreign enterprises to set up shop in Djibouti?
MAHDI DARRAR OBSIEH: The government’s strategy to attract investors has led to a growth in foreign direct investment (FDI) and to a diversification of these investments, which were traditionally oriented towards the port and corresponding logistics infrastructure. In the past five years, mainly through investments in the Free Zone, the National Investment Promotion Agency has recorded a total private FDI volume of $1.3bn. Efforts have been made to further attract FDI and to improve the country’s business climate by developing projects focused on strengthening good governance, enhancing commercial justice and the creation of a Fund for Guarantees and the one-stop shop mechanism. These measures will strengthen the country’s regulatory environment and adherence to international norms and standards, thereby making Djibouti a more attractive location for foreign investors.
Moreover, initiatives have been taken to protect commercial, industrial and intellectual property rights through the creation of the Office for the Protection of Industrial and Commercial Property Rights and the Djiboutian Office for the Protection of Intellectual Property Rights, providing investors with local expertise when dealing with these issues.
Finally, a strategy has been designed that envisages the creation of special economic zones across the country that will strengthen the country’s industrial and commercial potential. A pilot project will soon be launched that will see the establishment of these economic regions in the capital and in every region. By stimulating investment into these areas, these zones aim to change different regions’ comparative advantage into a competitive advantage, and hereby stop the rural exodus by providing the local workforce with the means for both subsistence and economic development.
How will the one-stop shop mechanism impact the business environment?
OBSIEH: The one-stop shop mechanism will decrease the time and number of registration procedures for companies, which will result in lower costs and delays. This will improve the overall business climate and make it easier for investors to set up their businesses in the country. At the same time, there will be supplementary services offered at the one-stop shop such as the formalisation of companies, the setting-up of a telephone plan with Djibouti Telecom, subscription to Djibouti electricity and the water network, advice on obtaining construction permits and agreements concerning transfer of property. Having only one representative and one physical location to handle all procedures and formalities, investors will be able to start their business activities as swiftly as possible.
What are some of the challenges investors are currently facing when doing business?
OBSIEH: In Djibouti there are more opportunities than challenges for investors. Yet the most important challenge is the accessibility and cost of energy. The government is prioritising this issue, and the recent signing of the electricity connection between Djibouti and Ethiopia will satisfy partially the country’s energy needs. These efforts are sure to be further complemented by current explorations by of renewable energy sources such as geothermal, solar and wind.
Another challenge for the country is the effort to better stimulate cooperation between private investors and local enterprises. One should not forget that local small and medium-sized enterprises are responsible for the majority of job creation in Djibouti, and that the local workforce is currently ready to cooperate with international investors in contributing to the country’s ongoing development.
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