The man who wants to make Djibouti the next Dubai

Ilyas Dawaleh was a businessman before be entered politics and rose to become a minister.

Wednesday, March 18, 2015

Ilyas Dawaleh has an ambition: he wants to make his country the Dubai of Africa, and he is getting plenty of help from the UAE to help him achieve that.

Mr Dawaleh is the minister of economy and finance of Djibouti, the small but strategically situated country on the Horn of Africa. It commands the entrance to the Red Sea and acts as an entrepôt for the landlocked countries in East Africa such as Ethiopia and South Sudan.

Location is its blessing but also, Mr Dawaleh recognises, its challenge. In the midst of unstable neighbours such as Somalia and Sudan, with Yemen just 29 kilometres away across the Bab el Mandeb (Gate of Anguish) straits, Djibouti nonetheless would like to a be a safe commercial haven for East Africa, as Dubai is for the Arabian Gulf.

“The model of Sheikh Mohammed bin Rashid is the one I’d like to follow. Dubai, and the whole of the UAE, have a very special status in my country,” he says.

Which makes the current situation slightly bizarre. There has been big investment in Djibouti by several UAE groups. Nakheel, for instance, helped to build the US$400 million Palace Djibouti hotel and resort in the country.

But the biggest and most high-profile example of Djibouti-Dubai cooperation is currently “tarnished” (in the words of one of the project participants), and is the subject of legal arbitration in the London courts. Djibouti is claiming tens of millions of dollars from DP World, the Dubai-based ports company, on the grounds of alleged fraud conducted by a former official of Djibouti’s port and free zone authority, which DP World helped to build a decade ago.

Another big Dubai entity, Emirates National Oil Company, was also involved in the port’s construction.

Mr Dawaleh, a businessman before be entered politics, is not qualified to comment on the legal intricacies of the DP World case beyond saying: “The relationship is still cordial and DP World still runs the container terminal. One case must not affect our relationship with the UAE.”

In fact, it is believed the Djibouti and UAE governments are looking for “brotherly and friendly” ways to halt the London case, with Djibouti hoping to recover some of the funds it alleges were embezzled from it.

Such an outcome would be a boost for Djibouti and enhance its attractions as a destination for foreign investment. The country has one of the highest economic growth rates in Africa – about 7 per cent is forecast for this year – and has already drawn big investor interest.

“We see Djibouti as a logistics and commercial hub for the whole of East Africa. We already have the biggest port on the eastern coast, but the eastern side of the continent is underserved. There are more ports on the western side for a smaller population,” he explains.

The strategy is contained in the ambitious Djibouti 2035 plan, which is based in four pillars: good governance, private sector-led diversification, human development in terms of health and education, and leading regional economic integration.

Economic and political relations with Ethiopia, the big close neighbour with a population of 90 million but no seaport, are crucial. Djibouti already serves as the trans-shipment port for Ethiopia and recently concluded a $2bn power link that supplies about 70 per cent of Djibouti’s energy needs. A top-grade rail link is scheduled to open next year.

New projects under way or under consideration include new port facilities, airports and free zones. Again, the parallel with Dubai, with its focus on the “three Ts” of transport, trade and tourism, is striking.

Telecommunications is another priority, Mr Dawaleh points out. ”We already have the largest telecoms infrastructure in the east of Africa, similar in size to that of South Africa, but we want to be bigger,” he says.

Six new fibre-optic cables are planned to make the country a telecoms hub between the high- traffic zones of Africa, the Middle East and Asia, and Europe, he says.

Other areas earmarked for expansion are tourism, both eco-tourism and luxury business, as well as fisheries, in which Djibouti has ambitions to be a seafood processing hub.

The country is investing heavily in geothermal energy plans, alongside funds from the World Bank, with the aim of making Djibouti the first green energy hub in the continent.

The minister realises that all these ambitious plans are of little value without security. He has just returned from a meeting in Washington with John Kerry, the US secretary of state, at which the Americans reiterated their support for and investment in the security of the country, where they have their only land base on the African continent, Camp Lemonnier.

“There is no such thing as zero risk anywhere in the world now, but we manage security successfully, with help from our allies. Djibouti people are moderate, tolerant,” Mr Dawaleh says.

The other perennial problem is corruption, which has deterred foreign investors in Africa for decades. But Mr Dawaleh says that the country is committed to high standards and has an anti-corruption commission operating under its president, Ismail Omar Guelleh. “You could say we’ve also taken the fight against corruption to London,” Mr Dawaleh says.