Aboubaker Omar Hadi, Chairman, Djibouti Ports and Free Zones Authority: Interview

Interview: Aboubaker Omar Hadi

How is Djibouti financing the large capital investments required for its port upgrades?

ABOUBAKER OMAR HADI: Djibouti’s economic growth in recent years has been the result, in large part, of increased activity in the transport sector, and specifically the volume of traffic coming through – and the performance of – the ports. Djibouti is not only well-placed in terms of access to Africa and the Middle East but also sits on the major shipping route between Europe and Asia. As a result, the Port of Djibouti currently serves as a gateway to one of the fastest-growing regions in the world, with 30,000 ships transiting per year.

To help expand Djibouti’s ability to serve as a platform for East Africa – including not just Ethiopia but South Sudan and further afield – we are inaugurating six new ports. These ports will target several different sectors and activities, from minerals to livestock, and three of them will be operational by the end of 2016.

These require major investments, as do many of the other large projects currently under way in the country – like the two airports. But we have to take a pragmatic approach to financing these, inviting a number of our economic partners – who will benefit from the improved access to markets like Djibouti and Ethiopia – to play an active role in backing them. As a result, three of the ports are being financed by Chinese investors, while one is being funded by the GCC, with two more – due to start construction in 2016 – by European and African investors.

To what extent is ancillary infrastructure needed to ensure the competitiveness of Djibouti’s ports?

HADI: The new port facilities are just one component of a much bigger infrastructural plan that looks to leverage Djibouti’s location and its role as a gateway to Ethiopia, South Sudan, Somalia – even Yemen and the Great Lakes of Africa. To ensure that the improvements in performance and efficiency in our ports carries through our entire transport network, there are a number of projects under way to boost intermodal connections, thereby reducing delays and costs.

This is particularly important given that Djibouti is currently one of the most efficient ports in the world, with up to 34 movements per hour. To ensure we are able to keep pace with demand, and increase our share of traffic from competitors like Jeddah and Salalah, as well as other ports in the region, like Lamu and Port Said, a holistic approach is crucial.

Among the biggest projects are the two new railways linking Djibouti City and Tadjourah with Ethiopia. Between them they will significantly reduce congestion on the motorways and bring down the time it takes to transport cargo from the port to Addis Ababa by more than a day. Two new airports are also under construction, while Air Djibouti’s revitalisation will ensure there are sea-air connections not just within the region but also to West Africa and beyond.

With a slowing global economy, what sort of demand do you expect for the expanded free zone?

HADI: In many ways Djibouti was one of the originators of the free zone concept, with a free port status dating back to 1954. When we put in place the current free zone – which already covers 17 ha – in the year 2000 we were able to attract nearly 170 companies from nearly 40 countries.

Djibouti benefits from a stable political environment and an attractive geographic location which – combined with our high-quality infrastructure projects – has meant that demand for free zone space has continued to grow. As a result we’re launching a $3.5bn, 3500-ha expanded free zone to cater to that demand, with a number of companies from China, in particular, already committing to sites. To ensure these companies have the necessary infrastructure in place, we’re looking to expand power generation for just the port and free zone area by 3500 MW through independent power producer programmes.