Facilitating access to locally produced construction inputs forms part of the government’s long-term development agenda, Djibouti Vision 2035. The blueprint prioritises the industrial production of construction inputs, alongside other building materials, to meet the needs of the local market for construction and public works. Such developments could help reduce the reliance on imports and lower building costs.
Local Capacity
In the face of electricity costs that often deter large energy consumers such as cement and steel companies, domestic cement is manufactured at two main production units. Government-owned cement plant Cimenterie d’Ali-Sabieh commenced operations in 2013. With an annual capacity of 240,000 tonnes, production is largely for domestic consumption. Privately owned, UAE-based Nael Cement Products was also inaugurated in 2013, offering an annual capacity of 220,000 tonnes. In both 2017 and 2018 Djibouti produced 190,000 tonnes of cement – below the 460,000 tonnes of combined capacity at the two plants.
Imports
While imports can help meet Djibouti’s demand for building materials, port delays have historically posed a challenge. Shortages in materials can delay project timelines and discourage foreign investors from entering the market. However, the 2017 launch of port upgrades was a key advancement towards streamlining import procedures. As a marker of progress in this regard, in 2021 the Port of Djibouti was ranked the top port in sub-Saharan Africa in the global Container Port Performance Index, published by the World Bank and Standard & Poor’s Global Market Intelligence.
Of Djibouti’s $8.2m worth of cement imports in 2019, the majority – or 59% – was sourced from Ethiopia, based on data from the Observatory of Economic Complexity. The UAE placed second, with 23%, and Saudi Arabia came in third, with 17%. Import values for 2020 were lower, at $4.9m, amid global headwinds and local restrictions. Ethiopia is among the top cement producers in sub-Saharan Africa, with 17.1m tonnes of capacity as of the first quarter of 2020, according to the country’s Chemical and Construction Inputs Industry Development Institute. Ongoing developments to enhance cross-border connectivity between the two countries seek to solidify the trade and logistics relationship, with a view to enhancing regional integration.
Major Projects
The ongoing construction of free zones, along with related infrastructure and industrial centres, is expected to stimulate the local production of building materials in the years ahead. Among these, the $3.8bn Djibouti Damerjog Industrial Development Free Trade Zone will include a 150-MW gas-to-power plant. The development of the complex will help Djibouti to better meet the region’s hydrocarbon needs. Once installed, the energy supplied by this plant will support future manufacturing activities within the country’s first heavy industrial and petrochemicals hub, including steel, metal mesh, PVC pipes and glass.
Infrastructure development can also facilitate the transport of essential raw building materials. This includes the Addis Ababa-Djibouti rail line launched in 2018. The electrified track is the first trans-boundary railway on the African continent and reduced the cost of transporting freight between Djibouti and its largest cement source market by around one-third. This underscores how enhanced connectivity is able to drive economic growth and industrialisation, while also lowering development costs across the region.
Prospects
Djibouti’s long-term development agenda recognises the importance of strengthening access to locally produced construction inputs in order to meet the needs of the national market. Ongoing efforts to bolster the domestic manufacturing of inputs, including cement, present an opportunity to support the expansion of the construction ecosystem in the years ahead. This could help facilitate sustainable urban development, professionalise the industry and raise productivity – unlocking benefits for workers and investors, the local population and the national economy.
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