By Francis Forsey
Known by few in common society, Djibouti is a country to watch.
With a population of 942,333 (2016), and a land area of 23,200 km2, Djibouti is one the smallest countries in the international community. To compare Djibouti to the hegemonic states around the world, such the United States, Russia or China, is to take leave of one’s senses. However, the world continues to remind us that size doesn’t matter when it comes to international significance.
North and South Korea, Hong Kong, Singapore are but a few examples of small states with a large international presence, whether it is in terms of economics, history, politics or security. These states have been able to utilise their geographic positions (alongside many other factors) to their advantage, and have become global hubs for shipment and finance. For such small states, they punch well above their weight. Many observers pitch Djibouti to be the next transport super-hub, rivalling Dubai, Hong Kong or even Singapore.
So why too do I believe that this tiny state, which has felt the tight grip of economic depression (GDP per Capita in 2015 measured at $1,862.17, but is climbing), could become the next Dubai? What features does this state have that allows it to have such potential? Djibouti has proven its value to international stakeholders, hosting numerous military bases. The state provides a perfect outpost for not only the East African region, but also the Middle East. Located at the bottom of one of the busiest shipping channels in the world, Djibouti is a perfect point of call. The Chinese shipping industry took note of this, and are working currently to expand Djibouti’s industrial capability for Asian cargo. Having piqued the interest of such an important world power, the future looks full of potential. Whatsmore, the Port of Doraleh in Djibouti City acts as the main gateway to the sea for neighbouring state; Ethiopia – The second most populated state on the African continent. With spectators predicting the economic boom of many African states in the near future, Djibouti may have the opportunity to not only facilitate it, but to also heavily benefit from regional development.
A senior executive at Doraleh Container Terminal, Suleiman Ahmed, expressed his excitment at the increased global interest in Djibouti to international news agency, NEWS24.
“We are now making the way to be a Dubai, even Singapore!” – Suleiman Ahmed (News24, 2015)
So why then, given the decline of shipping in Europe and East Africa in recent years, has Djibouti not already seen an economic boom?
I have no doubts of Djibouti’s incredibly fortunate geographical strengths, nor of its potential to rapidly develop into a ‘superstate-like’ country. Surely the same strengths apply in part to Djibouti’s neighbouring states of Eritrea, Yemen and Somalia too? Whilst Djibouti indeed has many strengths, it unfortunately has many issues holding it back. In addition, many have argued that these strengths Djibouti possesses could also prove to be ‘anchors’ in the long-run, holding back development. Some go further, and say that a rush to development could be Djibouti’s downfall.
The first obstacle to development for Djibouti falls outside of its borders. Regionally, the Horn of Africa is unstable. As such, it is difficult for Djibouti to try and negate these issues. The first issue lies South of Djibouti. The Republic of Somalia has struggled with extremist insurgencies, political instability, and large-scale maritime piracy. The British Government currently advises extreme caution for visiting Brits, and the US State Department reiterates this sentiment, going on to state that travel to the country should be avoided at all costs. In 2017, the terrorist organisation Al-Shabaab bombed the capital, Mogadishu, and left over 500 civilians dead. This attack was the third-deadliest act of terrorism in recorded history. Transparency International registers Somalia as the most corrupt countries on their 2016 Index. The Republic even falls behind the Democratic People’s Republic of Korea.
To the North, Djibouti’s relationship with neighbouring Eritrea can best be described as ‘ropey’, characterised by frequent border clashes and continuing territorial disputes. The State of Eritrea is a large source of instability in the Cape Horn region, with the one-party government earning it the reputation as one of the worst abusers of human rights. The UN Human Rights Council accuses the state of extrajudicial executions, torture, long-term conscription and forced labour that create a climate of repression driving many to flee abroad. In light of the ongoing refugee crisis occurring across Europe over the past few years, which has seen many fleeing from the state perish in the Mediterranean, the plight of the Eritrean people has hit surprisingly little headlines. Regardless, the unpredictable state puts great pressure on international investors when it comes to investing their funds in neighbouring Djibouti.
Across the Gulf of Aden, to the North-East, Yemen is locked in a bitter civil war which has seen an international coalition raise entire districts to the ground, cross-border skirmishes and terrorist groups mercilessly attack civilians. In the refugee camps, organised crime and outbreaks of cholera remains a consistent threat to lives. Famine grips the nation, and the international community is reluctant to intervene. To this day, there is no widely accepted death toll. Geographically speaking, however, Yemen is arguably the best suited to be a trade hub, with a long coastline ripe for development, and good access to both the Middle East and East Africa. Unfortunately, Yemen’s GDP per Capita remains one of the lowest in the world, measured at just $990 per person in 2015. Whether or not you view this as a decent economic measure for development, the low number no doubt reflects some degree of accuracy. Nethertheless, the widespread state of conflict has undone decades of development, and will also ensure economic development remains low for many years to come.
Whilst this article may have described Djibouti as the pinnacle of stability in the region, it too suffers from domestic issues. Corruption is endemic in many developing states across the world, and unfortunately continues to be an obstacle to development. Djibouti ranks 123/176 on Transparency International’s Corruption Perceptions Index (CPI) 2016*. Political corruption in Djibouti, many foreign journalists and observers argue, constitutes human rights abuses. The single-party controlled government offers little in political alternatives, and opposition parties face constant oppression. This is in turn passed on to the voters, who see few parties to champion their rights. Those who fall out of line with the government’s ideal often face persecution. Furthermore, the government has cracked down on independent media, and is alleged to have been complicit in the maltreatment of journalists both within Djibouti and abroad.
A problem which may be seen in the future for Djibouti, is the over-reliance on foreign investment. It is common knowledge that Chinese investors are buying up large swathes of industry across the African Continent. This no more true than in Djibouti, where Chinese banks were reportedly planning to largely finance 14 huge infrastructure projects in 2015, costing nearly $14.4bn. Regional actors are also trying to get their foot in the door, so to speak, with Dubai-based firm, Middle East Development LLC, proposing the construction of a bridge between Yemen and Djibouti; aptly named the ‘Bridge of the Horns’. If capital movement shifts, then Djibouti could suffer severely, as investors pull out. If foreign debts grow too high to handle, then it is possible that the country could face bankruptcy. Whilst the Djiboutian government has tried to ameliorate fears expressed by conveying their predictions of strong economic growth recouping the growing foreign debts. Whatsmore, American Journalist, Kaitlin Hocker (2017), accuses Djibouti of deeply worrying fiscal irresponsibility. Missing records from the National Budget relating to port profits does little to quell the fears of international investors.
This article has looked just a few factors behind why Djibouti is yet to see rapid large-scale economic development similar to that seen in Dubai and Singapore. Regional instability and its resultant unwelcoming investor climate, and endemic corruption are perhaps two of the main contributing factors. There are many others to consider, of course, but for clarities sake they have not been discussed. If one desires to further research on the topic, other factors that could have included; organised crime, international piracy, domestic security concerns, ethical tension and simply the argument that the world does not need anymore Dubai-like states right now. A less structurally strong, but important argument nonetheless, posed in this article is the potential for long-term issues of rapid-development. Looking down the line, Djibouti may fall victim to its own potential success, as global economic patterns change out of the states’ favour, leaving it with large foreign debt. Over dependence on a sole industry can prove fatal; as Holland saw in the 17th Century following the collapse in the market price of their main exports. This pessimistic outlook is, however, speculative. What is for certain, however, is that Djibouti is a state to watch.
* It should be noted, however, that the CPI is inherently flawed, and only represents an advisory figure.
This article is written in response to numerous articles on the matter – most notably News24’s article: https://www.news24.com/Africa/News/Horn-of-Africas-Djibouti-dreams-of-becoming-new-Du bai-20150524-7
Picture Source: https://www.vesselfinder.com/ports/DJIBOUTI-DJIBOUTI-1044
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