146 COUNTRY PROFILES
EAST AFRICA
DJIBOUTI
Geostrategic calculations
A Chinese naval base and huge loans show the growing closeness with Beijing
P
resident Ismail Omar Guelleh’s government is pushing the country’s infrastructure development at breakneck speed to coincide with Ethiopia’s industrialisation, but in doing so has racked up debts that the economy will struggle to pay back. And despite previous pronouncements about loosening his authoritarian hold on the country and preparing his retirement, Guelleh shows no sign of intending to do either. He has again said that this current term will be his last. Having removed presidential term limits in 2010 and won the 2016 presidential election, Guelleh sees few threats to his longevity on the political front. He has outmanoeuvred the Union pour le Salut National (USN) and his government is regularly criticised by local and international human rights groups for arbitrary arrests and limiting political freedoms. USN leader Ahmed Youssouf died in September 2017, and so the opposition is searching for new leaders. The opposition has been divided and talks are ongoing about how best to organise for legislative elections planned for 2018. Islamist parties put in a strong showing in the 2013 elections, and since then the government has tightly controlled the religious sphere, paying imams and choosing messages to be delivered. ETHIOPIA LINKS
The year 2017 was one for ribbon cutting ceremonies and 2018 will be a year of consolidating gains. The government launched an expansion of the Doraleh port to rival the one at Djibouti in May, and that was followed by the opening of a port for the export of Ethiopian potash and another for the salt trade. The new rail line linking Djibouti to the Ethiopian capital of Addis was due to begin commercial operations in late
ETHIOPIA
DJIBOUTI
Gulf of Aden
DJIBOUTI SOMALIA
30 km
Population: 1 million Population growth: 1.6% GDP per capita: $2,040 Life expectancy: 62.3 Adult literacy: ND Inflation: 3% Human development index (out of 187 countries): 172 Foreign direct investment: $160m Current account as % of GDP: -21% Mobile phone penetration: 38% Key export: Gold Last change of leader: 1999 GDP growth (%)
6.5
6.5
JOBS FOR THE MASSES
7
7
GDP ($bn)
1.7
1.9
2.1
2.3
2015
2016
2017*
2018*
*Estimation October 2017
New ports were opened in 2017, but unemployment remains a big challenge
city, which accounts for the majority of the population and economic activity. Much of the investment in new transport projects is coming from China, which opened its first foreign naval base in Djibouti in July 2017. The closeness is set to continue as the government backs new road projects, a desalination plant and the construction of housing units. China Civil Engineering Construction Corporation was due to build new airports at Ali Sabieh and Seven Brothers Islands, but the government announced in October that it is seeking new contractors for the projects. Chinese contractors also launched work on a 48km² free trade zone in January 2017 that is part of China’s ‘One Belt, One Road’ programme to build up trade ties.
YEMEN
ERITREA
2017, and ties between the two countries were strengthened with the June start of a $327m project to transport drinking water from Ethiopia to Djibouti. Despite Djibouti’s desire to become an East African logistics hub, it is ranked 154th out of 190 countries in the World Bank’s2018DoingBusinessrankings.The government wants to encourage more investment and help more companies become legally established, as the majority of the country’s companies are said to operate informally. On the government’s agenda is a decentralisation programme that is intended to spread development and take some pressure off of the capital
Growth levels continue to be high, but Djibouti’s debt levels have skyrocketed since 2014, with the government having sourced Chinese loans to build the rail line and other projects. The International Monetary Fund (IMF) warns that Djibouti is at a high risk for debt troubles. Government debt now stands at more than 85% of gross domestic product. Debt levels are predicted to remain at about the same level at least until 2021. While investment in transport infrastructure boosts headline growth, it is not transforming the economic base, bringing people out of poverty or creating jobs for the masses. As a result, the government has made issues like social housing and employment the centre of its platform for this term. The government is counting on Ethiopia, which plans to become a major electricity exporter to the region. The state utility currently sources 80MW from Ethiopia. The government’s plans for the nascent free trade zone include a 3,700MW power plant. In September, the government signed a deal for a 60MW solar plant with the Africa Finance Corporation to be built at Goubet. Elsewhere, a drilling programme is due to determine if a geothermal plant with 100MW capacity can be developed.
THE AFRICA REPORT
•
N° 96
•
D E C E M B E R 2 017- J A N UA R Y 2 018