A strategic geographical position in the crossroads of global internet connections has set Djibouti up with a unique opportunity to serve as an ICT gateway between the major regions of the world. Although the telecoms sector remains largely dominated by state-run operator Djibouti Telecom, it has nonetheless received sustained investment in mobile networks, submarine cable connections and infrastructural upgrades. All of this, combined with government efforts to bolster the role of telecoms and ICT in broader national development, provides multiple investment opportunities in the industry, and lines up with greater plans to increase the sector’s regional role in accordance with Djibouti Vision 2035, the country’s long-term national development policy implemented in 2014.
Background
The current state of the telecoms sector in Djibouti began in 1999, with the fusion of the Post and Telecoms Office and the International Telecoms Company of Djibouti, creating Djibouti Telecom, the country’s singular telecoms and IT operating body. As one of the largest companies in Djibouti, it maintains a degree of internal autonomy, although it is entirely owned by the state. The carrier is one of the most important East African telecoms players, connecting wholesale enterprise customers across the globe.
The operator offers four types of service: fixed telephony, mobile telephony (both GSM and, for rural areas, CDMA) internet access, and data for both regional and international connectivity. That being said, in recent years the sector has been met with a number of challenges that have constrained growth. Broadband services in Djibouti remain relatively expensive, and penetration in all market segments is low, despite fast-paced growth in internet and mobile markets. Djibouti Telecom’s response has been to forge international alliances and to become a significant investor in cables such as the Djibouti Africa Regional Express (DARE), the Pakistan East Africa Cable Express (PEACE) and Australia West Express (AWE) submarine systems.
Oversight
Charged with overseeing telecoms activities, the Ministry of Communication and Culture implemented Law No. 80/AN/04/5th in 2004, which outlined a national policy for the use of new technologies. Under this legal framework the government defined the following central priorities: increasing access to IT services for the whole population; reducing telecoms costs in order to strengthen external competitiveness and attractiveness as an investment location; and expanding telecoms as a factor that is conducive to regional integration and action against poverty and illiteracy. Responsibility for sector oversight has been assigned to the Djiboutian Agency for ICT Regulation, which has the sole judicial capacity for regulating the domestic ICT sector and managing the distribution of licences for data connections, both domestically and externally.
From an administrative standpoint, the government of President Ismaïl Omar Guelleh hopes to strengthen external competitiveness, promote access to the internet, especially from a young age, and cement Djibouti’s place as a site for international information exchange and as a regional digital platform. Such designs are in line with Vision 2035, which aims at growing and diversifying the economy through the promotion of multiple sectors including ICT. President Guelleh is also enforcing the importance of ICT in the politics of sustainable development throughout Djibouti. The National Investment Promotion Agency has installed an application that tracks the evolution and advancement of reforms taking place in real time. Partners have access to the application, meaning they can track and visualise the progress. This platform therefore allows a better coordination and collaboration for partners in the realisation of these reforms.
Fixed-Line
Globally, fixed-line connections are decreasing in prevalence, as the dominance of mobile devices in daily communications continues to increase. However, poor mobile data coverage and the relatively inexpensive cost of fixed-line services mean that Djibouti’s landlines continue to rise. By the end of 2016 there were 24,929 subscriptions to fixed lines, compared to 22,902 in 2015, signifying an increase of 8.85%.
Telecoms infrastructure remains concentrated around Djibouti City, so remote regions see lower levels of connectivity. However, with only one-quarter of the population living outside the capital or its surrounding areas, it means that a majority of the population have access to fixed-line connections.
Mobile
Despite the enduring popularity of landlines, mobile phone subscriptions are increasing in popularity, although the overall mobile penetration rate remains low. According to data from the World Bank, there were around 36.6 subscriptions per 100 people in 2016, up from just 5.6 subscriptions per 100 people a decade prior. Of the mobile connections in the country, approximately 21% were using broadband services, according to a report issued UK-based social media and communications company We Are Social.
These figures indicate substantial room for the market to grow. In cooperation with Swedish multinational networking and telecoms firm Ericsson, the country introduced the 3G+ network to replace the 2G GSM and 2.5G EDGE mobile networks in 2011, and a 4G network in June 2018. Web users are now able to benefit from a network with broadband services including 4G LTE technology. The implementation of this service provides an internet connection speed of up to 300 Mbps, compared with previous network speeds of around 42 Mbps. Consequently, data usage consumption has gone up since the deployment of 4G, due to its faster connectivity and higher bandwidth benefits.
As is common in emerging market countries, the use of pre-paid subscriber packages is most prevalent, with 97% of mobile connections pre-paid as of January 2017. Nonetheless, Djibouti Telecom endeavours to encourage demand through subsidised access to smartphones and post-paid plans, with the aim of expanding subscriber bases for more high-usage packages. Monthly services are currently available offering between 20 MB and 500 MB of data, with packages costing between DJF500 ($2.80) and DJF5000 ($28.10).
Internet Usage
In line with increasing broadband services, internet usage is growing fast, although estimates vary. According to We Are Social, in January 2017 Djibouti had 190,000 internet users, up 90% year-onyear, indicating a penetration rate of 21%. Further data showed that, by device, 70% of those accessing the internet were doing so by using their mobile phones, followed by laptops and desktops (28%), tablet devices (2%) and other (1%). Meanwhile, the World Bank estimates that in 2016 the percentage of the population with internet access hovered around 13%.
Some 23,180 Djiboutians had ADSL connections by the end of 2016, marking a decrease from the 24,165 people at the end of 2015. The relative higher prices associated with ADSL connections act as a deterrent, especially as such a high number of people are able to access the web using broadband networks. The monthly cost of ADSL connection is roughly DJF2500 ($14), representing 17% of the average monthly wage.
Efforts have also been made to extend terrestrial fibre-optic cables to urban areas to promote business growth. In 2008 Djibouti Telecom launched its fibreto-home initiative, with the intention of improving the reliability and speed of internet connection, primarily for retail users. As foreign investment increases, so does the need for international and local enterprises to have stable and fast data connections, especially as Djibouti’s new container terminal and airport bolster the country’ goals of positioning itself as a transport centre for the continent (see Transport chapter). Data port access points have therefore been multiplied, some specifically for the Djibouti Free Zone and other major facilities such as the Kempinski Hotel.
With roughly three-quarters of Djibouti’s population living in urban areas in and around Djibouti City, securing basic coverage for the majority of the country is therefore relatively unchallenging; however, rural coverage remains sparse. The WiMax cable, installed in 2013, has allowed for internet access to more remote areas, especially locally based institutions such as schools and hospitals. The new 4G LTE technology will also help to increase connectivity in Djibouti, as it will serve areas not yet covered by cabled networks.
Facilitating Access
In order to promote internet access from a younger age, President Guelleh’s government has implemented plans to connect all secondary, tertiary and professional educational facilities to the internet via the Smart Classroom programme. The initiative is expected to see the installation of multipurpose equipment centres, which will allow increased access to the internet for students and broader access to shared information through exchanges between students, teachers and various establishments. Smart Classroom centres will, however, primarily be used for access to the internet and online libraries, as well as for the sharing of information between establishments, both regionally and internationally. In June 2017 Abdi Youssouf Sougueh, the minister of communications for posts and telecommunications, in partnership with Djibouti Telecom, offered 5000 smartphones to students attending pilot Smart Classroom establishments.
Submarine Cables
On a global level, some of the sector’s biggest productivity gains are coming from Djibouti’s geographic position. The country boasts the highest number of international gateway connections in East Africa, some of which also provide data provisioning for neighbouring countries such as Ethiopia and Somalia as they lack their own greater data connectivity The country is connected to eight operating submarine cables that have come on-line since 1997. The first of these was the Aden-Djibouti cable. With a data speed capacity of 10 Gbps, the cable is a 269-km repeaterless submarine cable system between Djibouti and Aden in Yemen, which provides one of the latter’s only two international connections. Operational since 2000, the second is the South-east Asia-Middle East-Western Europe (SEA-ME-WE) 3 cable connecting Africa to Europe, Asia and Oceania across 33 countries. With a design capacity of 4.6 Tbps, the SEA-ME-WE 3 is the longest submarine system in the world. The third cable, SEACOM was launched in 2009 and stretches from Africa to Mumbai with a total capacity of 1.5 Tbps. In 2010 the East Africa Submarine Cable System (EASSy) data cable, the fourth to come on-line, finished construction with over of 10 Tbps of capacity, covering 10,500 km from Mtunzini in South Africa to Port Sudan on the Sundanese coast, and providing data access for over 250m people in East Africa. Also in operation since 2010, Djibouti is host to the Europe India Gateway submarine system, which spans 15,000 km between North Africa to India, the Middle East, Western Europe and the UK, with a design capacity of 3.84 Tbps. The sixth connection is the Middle East North Africa Submarine Cable System (MENA-SCS), which connects Egypt to Oman, Saudi Arabia, Italy and Djibouti with 9030 km of cable. The MENA-SCS became operational in 2014 and has a total capacity of 5.76 Tbps.
Djibouti Telecom continues to bolster the country’s status as the gateway to the region by investing in the next generation of international submarine infrastructure. These include the seventh and eighth cables, the Asia-Middle East-Europe-1 (AAE-1) and the SEA-ME-WE 5 systems, which came on-line in 2016 and 2017, respectively. At 25,000 km, the AAE-1 is the largest cable system to be constructed in almost 15 years, and the first next-generation cable to link all major African, Asian, European and Middle Eastern commercial hotspots via the lowest latency submarine route. It is also notable for its diversity in connecting to emerging markets in Myanmar, Pakistan, Thailand, Vietnam, Cambodia and Yemen. At 20,000 km in length, the SEA-ME-WE 5 cable runs between Marseilles in France and Singapore, connecting 16 countries across three continents. With a capacity of 24 Tbps on three fibre pairs, the SEA-ME-WE 5 cable is expected to answer growing bandwidth demand between Europe and Asia.
Coming Infrastructure
Global demand for international bandwidth grew by 52% in 2017, according to industry media, encouraging cable network operators to undertake extensive deployments. Hoping to encourage competition and aid the decongestion of existing systems, Djibouti Telecom joined six other regional telecoms firms to build the DARE cable system, which connects Djibouti to Tanzania, Kenya, Yemen, Ethiopia and Somalia over 5500 km. DARE will have a capacity of over 30 Tbps, and is hoped to be a powerful tool in the development of new network usages, capable of satisfying the increasing demands of East Africa and the Horn of Africa in terms of digital broadband connections. In July 2017 Abdi Ashur Hassan, Somalia’s minister for post and telecommunications signed an agreement with Minister Sougueh to see both countries planning to share the capacity of the DARE submarine cable, and cooperate on fibre optics, regional interconnections and cybersecurity, among others. The estimated readyfor-service (RFS) date has been set for 2019.
Meanwhile, Djibouti Telecom joined Pakistan carrier Cybernet in signing a memorandum of understanding and landing party agreement with the PEACE Cable International Network Company in August 2018. The agreements lay out the delivery plans and permit application work for each country. The 13,000-km PEACE cable system will connect Pakistan with Djibouti, Somalia and Kenya in it’s first phase, with an RFS date planned for the fourth quarter of 2019. The second phase will see the cable connect with South Africa and Europe at a later date. The PEACE submarine cable system will provide up to 60 Tbps of capacity.
Adding to Djibouti Telecom’s portfolio, in January 2017 it signed investment agreements and capacity purchases with GoToNetworks, the builder and operator of the AWE cable system. The 10,100-km cable will run across the Indian Ocean, directly connecting Perth to Djibouti City with a design capacity of 20 Tbps. The RFS date was estimated for the second quarter of 2018.
Data Centres
Djibouti is also home to the first and only carrier-neutral Tier-3 data centre in East Africa. The Djibouti Data Centre (DDC) has access to all major international and regional cable systems connecting Africa to the Asia-Pacific region, Europe and the Middle East, including the EASSy, AAE-1, SEA-ME-WE 3 and SEA-ME-WE 5 submarine cables.
Primarily owned by Djibouti Telecom, in 2016 the DDC introduced new cable backhaul tariffs to bring prices more in line with those in Europe and other regions. This has resulted in the DDC partnering with major multinational mobile telecoms companies, including South Africa-based MTN, India’s TaTa, Chinese firms PCCW and China Telecom, and in September 2017 China Mobile International (CMI) selected the DDC to help facilitate its global network expansion into East Africa. The DDC will support CMI in establishing cable lead access, cross-connect and co-location facilities directly adjacent to Djibouti Telecom’s cable landing station.
E-Services
On a local level Djibouti Telecom is also aiding the government in embracing digital services. In July 2017 the Central Bank of Djibouti launched its own e-money platform, with the goal of promoting the modernisation of the national payment system. In partnership with Djibouti Telecom, the country was able to introduce services such as mobile banking, mobile money, e-banking, electronic cheques and transfers.
In April 2018 it was announced that ongoing efforts to digitalise government services will receive support from the World Bank via a credit from the International Development Association worth $15m.
Rolling out digital services is expected to help the government collect taxes more efficiently and facilitate services for citizens. Over a period of four years the Public Administration Modernisation Project will focus on levering digital technology for a number of initiatives. These include bringing together the country’s multiple social registries into a single, integrated national identity system; funding a Citizen Service Centre to offer broadband connections and provide access and information regarding state services; as well as developing e-tax and e-Customs services to assist in the collection of state revenues.
Outlook
The development of ICT is fundamental to Djibouti’s economy. Services such as fast internet connections and data access and e-money are crucial for attracting key foreign investors, as they ensure them the tools necessary to maintaining their businesses. On both global and local levels development of the sector is rapidly expanding as can be seen with new submarine and regional fibre-optic cables, increasing global interest in the DDC, the government’s e-money platform and the Smart Classroom initiative. These should enable new services to help promote economic development in the East African region. Djibouti should continue to leverage its digital infrastructure by offering extended services to regional countries, including hosting third-party equipment or offering big data processing, among others. This would benefit regional countries, where greater internet use in financial services, health care and education could be a major boon. Challenges surrounding coverage in rural areas and high internet connection costs remain; however, it could benefit Djibouti to create a competitive marketplace for service provision, which in turn would lead to more competitive prices and the achievement of sector’s full potential.
Read More from OBG
