Interview: Carlos Lopes
What are the obstacles to increasing economic integration in the Horn of Africa?
CARLOS LOPES: One obvious obstacle is the question of stabilisation in Somalia. Regional peace and security is a prerequisite for greater economic integration. But in areas like cross-border cooperation on energy, or trade facilitation, enormous progress has been made. The benefit of deepening cross-border cooperation and collaboration among countries like Ethiopia, Djibouti and Somalia is that it could result in greater investment in infrastructure projects, as we have seen with the rail projects.
Further strengthening the corridor between Ethiopia and the port of Djibouti could facilitate greater Ethiopian participation in upgrading the port, given Ethiopia’s reliance on the port for international trade. To this end, outstanding infrastructural deficits need to be addressed and Djibouti needs to increase its trade with the region. There is a need for all the countries in the Horn of Africa to adhere to the COMESA Free Trade Area, the benefits of which include the free movement of people.
What are the advantages of Djibouti as an investment destination for foreign investors?
LOPES: Djibouti has a strategic position at the entrance to the Red Sea, which gives the country a clear comparative advantage in terms of its potential for port infrastructure extension, as well as the possibility of building a second port at Tajourah (in the north) to provide further logistical services. Djibouti also sees itself as the gateway and a major shipping corridor for trade with countries such as Ethiopia, South Sudan and others in the Great Lakes region.
Blue economy development should be one of the development strategies. The country is endowed with a 37-km coastline and pristine marine resources that can be sustainably managed and exploited towards socio-economic growth and enhanced food security. In addition, Djibouti has a great advantage in terms of potential tourism development. Foreign direct investment can be a key driver of economic growth and transformation.
What measures can be taken to ensure that Djibouti’s growth is sustainable and inclusive?
LOPES: The country should promote economic diversification to include the sustainable management and exploitation of existing resources in agriculture, fisheries, tourism and energy development. Tourism and logistical services offer huge potential for job creation among young people.
Investing in education and health is paramount to sustainable and inclusive economic growth. In the area of health, it is also essential to invest in training skilled health care workers and in removing potential barriers to medical services. Additionally, ICT should be strengthened to support and enhance all economic development endeavours.
What benefits will the Tripartite Free Trade Area (TFTA) bring to smaller economies like Djibouti?
LOPES: Implementation of the TFTA could boost the manufacturing and services sectors, especially if the phase two negotiations are concluded, as they include services, which is a strong value proposition for Djibouti. On the industry front, the economic sectors most likely to benefit are processed foods and light and heavy manufacturing. In these sectors, Djibouti can develop capacity to supply larger markets, as it can land intermediate inputs efficiently.
If the elimination of tariffs in the TFTA is accompanied by measures to remove non-tariff barriers and infrastructural deficits, the potential gains could be huge. New opportunities would arise for businesses within an improved trade regime. The TFTA could also play a catalytic role in achieving economic integration through the Continental Free Trade Area.
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