The main gate of Djibouti International Free Trade Zone (DIFTZ) is seen after the inauguration ceremony in Djibouti on July 5, 2018. / AFP PHOTO / Yasuyoshi CHIBA##########Nil##########
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Report DIFTZ, showcasing of “made in Africa

Several African heads of state, who gathered in Djibouti in July 2018, inaugurated the Djibouti International Free Trade Zone (DIFTZ) described as the largest free zone on the continent. By 2028, it should become the main export point of products made in Africa to world markets. 

Rwandan President Paul Kagame, guest of honor, the presidents of Somalia and Sudan, the Prime Minister of Ethiopia … Prominent figures attended, on July 5, 2018, the inauguration, with great fanfare of Djibouti International Free Trade Zone (DIFTZ). This shows the importance of the work. For Djibouti, as much as for its neighbors. “Connected to the main ports of Djibouti, it is intended to diversify the Djiboutian economy, create jobs and attract investment, by providing foreign companies with the high-quality logistical support essential to their operations,” Djiboutian Prime Minister, Abdoulkader Kamil Mohamed said at the ceremony. He also stressed the regional dimension of this “development tool for East Africa” according to the authorities at the inauguration. 

A world trade center

Indeed, located 23 km from the city center, with an area of 4,800 ha, for a total investment of $ 3.5 billion, the DIFTZ is described as the largest free zone on the continent. This will be done by 2028. “The DIFTZ is part of the overall 3+1 plan, in partnership with China Merchant and Dalian Port, to create a virtuous circle through the simultaneous development of an industrial zone and a financial zone that will support our maritime facilities. Today, certainly, we can say that this pharaonic project marks a key step in Djibouti’s journey to become a global trade center, says Aboubaker Omar Hadi, Chairman of Djibouti Ports and Free zone Authority. We are trying to attract foreign companies to this free zone to produce goods which can be sold on the African continent. Instead of producing elsewhere and transporting to African countries, production will be done locally, in the international free zone of Djibouti and from there, we will supply the countries of the continent and elsewhere.

That zone would play a crucial role in the advent of economic integration of the region and the continent as the African Continental Free Trade Area (AfCFTA) has come into force. And this happens in Djibouti, a small country in the Horn of Africa, located on the second busiest maritime route in the world, at the crossroads of trade between East Africa, the Arabian Peninsula, Asia and Europe, and port of entry of the Common Market for Eastern and Southern Africa (COMESA) with more than 400 million consumers, which has taken advantage of its geo-strategic position to place itself at the heart of the project of the new Maritime Silk Road.

Currently, it is a first pilot phase of 240 ha that has been developed with the “Diftz Djibouti International Tower”, the “Djibouti International Hotel” and the “first free zone” of 6.6 ha, dedicated to logistics activities, the One Stop Shop … “When you come to Djibouti, you don’t need to move around anymore, everything is here. Asphalted land, warehouses, offices, a hotel, and this tower, the One Stop Shop already operational, with management, banks already installed … All activity is centralized here, says Ali Ahmed Aouled, commercial director and head of public relations within the DIFTZ. Already 81 companies are installed, among them trading and logistics companies. While waiting for the development of the industrial phase which will lead tothe establishment of processing plants. “The raw product sent here will be processed on site before being directed to the East African markets. “That’s the target, the manufacturing sector, which will act as a lever on the development of Djibouti, creating added value, jobs. 

A connected free zone

What makes DIFTZ so interesting is that it is connected. To the road, to the railroad, as well as to Djibouti Damerjog Industrial Development (DDID), better known by its English acronym DDID, the other major project undertaken by Djibouti. This is an expansion of Djibouti’s ports and free zones. Covering a total area of 30km2 with a pilot start-up area of 2.51km2, the site is to house a new industrial park in the Damerjog area with oil storage terminals, a crude oil refinery, an LNG terminal, ship repair and dry docks as well as power plants, a building materials park and jetties, and a port area. Spread over a 15-year timeframe, the DDID is intended to consolidate Djibouti’s position as a logistics and trade hub, while developing new industrial activities and ultimately creating jobs.  ” We have investors visiting every day who want to reserve a space in the zone,” says Siman Moussa, Senior Manager, Project & Business Development Department at the DDID. This is a sign of the interest shown in the Zone. 

This is part of a vast project that has already resulted in the development of the Doraleh Multi-Purpose Port (DMPP), in Tadjourah, pending the construction of the Doraleh International Container Terminal (DICT), The Djibouti Ports and Free Zones Authority (DPZFA) and its partner China Merchant Group (CMG) (23.5% of shares), plan to develop a mega port complex, intended to become, among other things, the gateway to the Chinese market in Africa. 

Second largest traffic in the world by volume 

While a second road, which will be directly connected to the DNPP, is under construction, Djibouti is “ten years ahead” of its potential competitors, says Ali Ahmed Aouled. The latter delivers an informed opinion: before working for the DDFTZ, he operated on behalf of the port of Dubai. “ Circumstances transformed us into experts in this field. Because of our geographical position, our infrastructure, the expertise in logistics acquired over the years,… and the stability of the country. With the second largest traffic in the world in value terms, we are the gateway to the Horn of Africa. Even if others follow us, we are one step ahead of them. ” 

To keep it, Djibouti is betting not only on its infrastructure but also on its openly liberal policy. “The free trade zone regime is particularly attractive.” The only constraint is that companies must employ 30% local people within five years, and 70% thereafter. This, therefore, ensures the transfer of skills that will help to develop the local human capital. In the long term, the DIFTZ should help create 300,000 jobs. 

In addition to supporting Djibouti’s ambitions to position itself as a regional logistics hub, the DIFTZ will support the implementation process of the AfCFTA. It is for this reason that the DIFTZ has been given the “Gateway Award”. The Djibouti International Free Trade Zone offers companies not only access to landlocked African countries but also to the continental free trade market. This has led landlocked countries such as Rwanda to position themselves in the Zone. “We want to take Rwanda to the ocean,” President Kagame announced during his participation in the inauguration of the DIFTZ.

According to the Djibouti authorities, the expected economic impact on the GDP of the free zone will be 200 million dollars, or 11% of GDP in the pilot phase of operation on 2.4 km². It will then be ramped up by 2035 and 2040, in its extension phase, which will bring in between 2.5 and 4 billion dollars.

This is on condition that the DIFTZ, already built and partly financed by the Chinese, does not become the platform of Chinese economic influence in Africa… to the detriment of ‘made in Africa’ products…

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