African trade: Djibouti inaugurates its future giant free trade zone

President Ismail Omar Guelleh inaugurated this Thursday, July 5, the Djibouti International Free Trade Zone, on the shores of the Red Sea. This project is presented as the future largest free trade area of ​​the continent. But we finally know very little about the activities it has to accommodate.

Objective of the authorities: to make Djibouti a hub logistics and trade, the hub of trade between Africa, Asia and Europe. This zone, which will offer tax benefits that are expected to attract investors, should also help strengthen trade with African countries such as Ethiopia, South Sudan or the Great Lakes region.

At the inaugural ceremony, the Djibouti President Ismael Omar Guelleh extolled the merits of a " flagship project ", the culmination of several recent infrastructure projects " in the direction of strengthening Djibouti's place in commerce and international trade ". For the Somali president Mohamed Abdullahi Mohamed "Farmajo" this free zone represents a " victory for East Africa ". Ethiopian Prime Minister Abiy Ahmed, Rwandan President Paul Kagame and Sudanese President Omar al-Bashir echoed his remarks

Processing industries and jobs at the key

Ideally located along one of the busiest shipping lanes in the world, between the Indian Ocean and the Suez Canal, Djiboutian waters are already seeing nearly five million barrels of oil per day, more than a third of global flows. Djibouti inaugurated in 2017 three new ports and a railway line connecting it to Ethiopia, as part of its project to become the commercial platform of the region.

→ RELIRE: Djibouti: the city-state sees itself in "Singapore of the Red Sea"

The first phase of this project launched Thursday includes an area of ​​240 hectares. Once completed, the € 3 billion project, planned to last 10 years, is expected to expand to 4,800 hectares, making it the largest free zone in Africa. The project aims to allow foreign companies to locate processing industries in the free zone, to add value to products rather than just importing or exporting raw materials. This should lead to the creation of 15,000 direct and indirect jobs, as well as the construction of two airports.

Finally, very little is known about the actual activities that this free trade area could accommodate. Djibouti tends to attract investor mistrust because of its red tape and its authoritarian and repressive regime. President Ismaïl Omar Guelleh, in power for nearly twenty years, however, enjoys the leniency of Western countries which he hosts military bases: this is the case of France, the United States or China , new privileged partner of the Djiboutian regime . In addition, Chinese companies were responsible for the construction of the zone in March 2016.