Djibouti: Economic Success stories deserve to tell

By, Mohamed Ubo: With the help of the geostrategic location at the economic gate way to Africa, President Ismail with his patriotic attitude has achieved wide range of economic successes along with other admirable milestone cases in diverse sectors. Taking the advantage of 372 kilometer of Djibouti coastline with annual catch of around 50,000 tons of fish, president Geele has accomplished to move from the single traditional port which Djibouti has used for a long time and managed to build new two ports. According to many economic analysts, these new ports would make Djibouti the hub of the logistical operations in the region and the economic power house of East Africa for the years to come. Mr. Geele has as well secured a strong stable monetary system along with brilliant banking system resulted an investment led economy right across the country. He has succeeded to make Djibouti a model of peace, security and development in the region and in the world at large. This has created a peaceful coexistence among the different ethnic groups within the Republic which has become a dynamic catalyst for this prevailing economic progress. He accomplished to build a number of ports and terminals including oil terminal and container port in Doraleh in 2006 and 2009 respectively. He helped to revive the dying Somali literature which all Somali origins were concerning for many years and has instituted to care the Somali language. During his time in power his government has delivered a number of plausible economic sector reforms delivered annual growth of 5% for many years which is impressive by any standard (African development Bank, 2012). These success stories and others in a long list have crafted to re-elect him with a wide margin of victory in 2011 election despite the rejections from the oppositions.
Although Djibouti has little natural resources which are mostly untapped, Geele with a great deal of bravado disproved and has broken the cycle of poverty and despair during his period in office. He achieved a considerable economic growth in 2013 with the help of extensive port services and revival of foreign direct investment (FDI) which could be good chapters to learn. The Total cost of Doraleh project was US$339 and will work in a capacity of 1.2 to 1.8 million TEUs per year by 2015 (Islamic Development Bank, 2013). Mr. Said Omar Gueleh, General Manager of Djibouti Port once said: “Within the past 10 years, the strategic planning for us has been the development of specialized terminals by encouraging private sector investments. This has resulted to the construction of new specialized platforms, a grain and fertilizer terminal, an oil terminal and a Container Terminal, free zone development.” This wide-ranging progress has grasped the attention of both regional and international investors and activated the influx of the international community to invest this geographically small country which has a strategically thinking leadership. As a result many people predominately from Middle East and the Gulf have been busying with building ports, roads, hotels and etc which immensely contributed the economic well-being of the country. His government also planned the redevelopment of the railway line between Djibouti and Ethiopia which will boost the trade between the two countries. Mr. Geele took the country economically from 1 % growth in 1999 to 5 % in 2013 real GDP growth, with country comparison to the globe at 60 in 2012 estimation (African development Bank, 2013).

President Geele realized to shape a stable monetary system with dynamically functioning central bank along with loads of professional commercial banks which the majority of the African leaders failed to figure. He has formulated a sound and sustainable stable monetary system with Djiboutian franc 177.72 per US dollar in 2013 estimation and that stability has not merely existed few years but has gone for a long number of straight years. In economic point of view, that stable monetary system is a corner stone for both domestic and international investments as investors` main concern in their businesses is the fluctuations of the monetary system.

Prior to president Geele, the economy has been dominated only by port trading and logistical operations but very fortunately during this era of Geele, the country accomplished to receive huge revenues from many other sectors. These sectors include telecommunications, commerce, banks, transport, hotels, tourism and etc which become economic turning point that encouraged private investment and reduced unemployment. Taking the advantage of the land locked countries of Ethiopia and South Sudan, the government of Geele reached and signed to build an oil pipeline agreement among South Sudan—Ethiopia—Djibouti in February 2012 which will generate massive revenues to the economy. As for the electricity and power sector which is the engine and catalyst of progress, president Geele has reached to build electricity line between Ethiopia and Djibouti which reduced the cost of the electricity and boosted up the economic growth as no country realizes economic development without low-priced and abundance of energy.

In addition Geele thrived to fabricate sound financial sector. President Geele once said this: “The fact that internationally renowned companies are coming to our free zone means that our aspiration to become a hub for exchange of goods is becoming a concrete reality. The boom witnessed in the banking sector is a further indicator evidencing the new economic shape of the country. Such investments, and many other ones, whether in the small industry sector or in the primary sector, are the precursor of jobs and sustained development so much needed by our citizens.” African Development Bank elaborated in 2012 annual report that the financial sector developed swiftly between 2006 and 2010 with the coming of new banks. There were two banks in 2005 but very fortunately there are 12 banks for the time being in 2014 which generates 14% of the Djibouti gross domestic product (GDP). The only tragic mistake is the interest rate in most of those banks; 10% interest rate for housing loans, 12% for normal loans and 15% for overdrafts (African Economic Outlook, 2012). And interest is not allowed to charge in Islam.



In conclusion, the success stories of Djibouti under the leadership of president Geele, With reference to what he has achieved apart from the politics, could be a shining example for East African leaders and Africa at large. Unlike some countries in East Africa, under the leadership of Geele, Djibouti has avoided all internal unrests, cross border disputes, civil disorders, piracies and terrorism. And as aforementioned, he has achieved in many areas including building new ports and electricity line from Ethiopia which have created to pull many deprived people out of poverty. In accordance with UNDP 2009 Report, Djibouti has been one of the countries that made the greatest progress for lowering hunger and undernourishment while many countries like Egypt, Morocco, Jordan, Lebanon and Yemen have been recorded increases in hunger and undernourishment. Though some people think that president Geele has not performed well during his term in office, he has by any standard succeeded to boost the economic wellbeing of the population. As a final point, despite many social and economic challenges are ahead on president Geele, he teaches his people how to seek and search for the 21st century opportunities in peace.

Mohamed Ubo
Independent researcher