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Djibouti City--port of the east: Djibouti is a major gateway for Ethiopia but its importance could dwindle in the long term.


Djibouti City is the capital and largest settlement in Djibouti, a tiny strip of territory situated in the Horn of Africa. It is home to just over three-quarters of the approximately 1m strong population of the state.

The capital has prospered in recent decades thanks to its port's proximity to the large Ethiopian market and a thriving foreign expatriate community. Around 3% of the population remains French, with Italians, Arabs of Yemeni extraction and Ethiopians constituting another 2%.

Landlocked Ethiopia has indicated its aims to reduce its dependency on the Port of Djibouti by expanding links with Mombasa Port in Kenya, Berbera Port in Somaliland and Port Sudan in Sudan. Djibouti City has so far benefited disproportionately because these rival ports are in neighbouring countries that are unable to compete efficiently: Kenyan port fees remain higher than Djibouti's, Sudan is an unstable state and Somaliland is internationally unrecognised.

The city also possesses the only sheltered harbour on the western side of the Gulf of Aden, and is strategically positioned near the world's busiest shipping lanes. Its seaport excels as both an international refuelling and transshipment centre, as well as the principal gateway for imports to, and exports from, neighbouring Ethiopia.

Dijbouti's port has also been a major beneficiary of the maturation of its neighbour's economy. Ethiopia saw its economy grow for its 11th consecutive year in 2013/14, posting 10.3% growth, according to the African Development Bank. Its growth is expected to continue in 2016, to Djibouti's ongoing benefit.

With a decade of continuous expansion, Ethiopia also finds itself ranked by the International Monetary Fund as among the five fastest-growing economies in the world. Handling imports, exports, and re-exports from Ethiopia represents 70% of all port activity at Djibouti's container terminal.

The seaport does not just export Ethiopian goods from Djibouti City, however. Djibouti also acts as a hub for the international community's NGO operations and hosts a thriving expatriate community.

Rachel Pieh Jones, a US expat from Minnesota, has lived in Djibouti City for 12 years, where she works with her husband for education NGO Resource Exchange International.

"The tallest building used to be four storeys, now there are buildings three times that. Electricity is more consistent, there is more variety of foods available in the stores and markets, new roads, entire new developments of houses and businesses. There is a new port and more under construction, more foreign military bases and a new railroad is under construction."

The city's facilities and the location of its deepwater port have also drawn actors of a less pacific sort than humanitarian NGOs. Visitors will notice there is a preponderance of military bases and logistics depots in Djibouti City or in its environs at or near the Gulf of Tadjoura.

Solid port infrastructure in Djibouti City and Doraleh, just to the city's southwest, makes for easy shipments and container clearings. It also a key focal point for naval forces to watch over the choke point of one of the busiest shipping routes in the world, where the risk of piracy remains high.

As a country lacking much intensive agriculture or advanced machinery, Djibouti has always relied on imports, which has helped maintain its openness to trade and to maintaining open shipping flows. Foreign naval bases have curtailed a serious threat to international trade from uncontrolled piracy and hijacking.

Meanwhile, by hosting sites for French, US, Spanish and Japanese military bases, plus a soon-to-be-built Chinese naval base, Dijbouti does not have to worry about any threats to its sovereignty from outside regional powers. This brings a sense of stability to the country in a region often associated with insecurity.

Kevin Amirehsani, analyst at Global Risk Insights, says: "When it comes to governance, Djibouti is far from a plural, democratic state, but since the resolution of its civil war in the mid '90s, it has presided over a remarkable degree of political, social, and economic stability, which is far more important for the US, French, Japanese and EU militaries that have set up shop in and near Djibouti City."

But despite the varied successes of Djibouti City's seaport, the capital is not untouched by the same development needs faced by its neighbours. Djibouti City itself continues to bear the hallmarks of a split economy, in which a modern economic rent-generating sector exists side by side with a large informal economy. The vast majority of Djiboutians exist in the latter.

For all its seeming advantages, Djibouti actually fell four ranks down the United Nations Human Development Index, from 164th in 2013 to 168th place in 2014.

As other African economies around it start to grow in the 21st century, the city will start to face great competition from its neighbours' facilities. If it wishes to maintain the lead it has generated since the 1990s, it will need to work more on bringing all of its residents into the modern economy its port facilities have started.
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Title Annotation:AFRICAN CITIES
Comment:Djibouti City--port of the east: Djibouti is a major gateway for Ethiopia but its importance could dwindle in the long term.(AFRICAN CITIES)
Author:Thompson, Neil
Publication:African Business
Geographic Code:60AFR
Date:Apr 1, 2016
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