Neil on Africa: Djibouti is worth its salt for loads of ‘White Gold’

OHANNESBURG – A country named after its capital, Djibouti City, Djibouti lies in north-east Africa on the Gulf of Aden in the Horn of Africa and at the southern entrance to the Red Sea.

Formerly known as French Somaliland (1896-1967) and the French Territory of the Afars and the Issas (1967-77), the country took Djibouti as its name when it gained independence from France on June 27, 1977.

With an estimated population of 960000 people and a gross domestic product of $1.97billion (R30.41bn) (World Bank 2018), the country is home to the third most saline body of water in the world, Lake Assal. The lake is a crater lake in the Danakil desert in central Djibouti. Dormant volcanoes and black lava fields back its emerald water.

More than 155 metres below sea level, it’s the lowest point in Africa and the third-lowest point on earth after the Sea of Galilee and the Dead Sea. No outflow occurs from the lake.

Due to its high evaporation rate, the salinity level of its waters is 10 times that of the sea. Lake Assal is the world’s largest reserve of salt, which has been named the “White Gold” and has given life to its nation.

Djibouti has had its geographical location working to its advantage, which can be seen in the developed countries’ interests in setting up either a base or shipping representation there.

Djibouti serves as a gateway to the Suez Canal, located at the Gulf of Aden and the Red Sea, through which 10percent of the world’s oil exports and 20 percent of all commercial goods travel. The Gulf of Aden/Red Sea is a critical water space, through which significant merchant shipping passes.

China has advanced in taking advantage of this by setting up a military base in Djibouti in 2017 – a step that elevated the African nation’s status while sparking concerns over China’s military might. This forms China’s “Belt and Road Initiative”, supporting Beijing’s juggling of commercial and military objectives in Africa. It hosts other military bases for France, the US, Japan, and the North Atlantic Treaty Organisation, as well as other foreign countries with forces supporting global anti-piracy efforts.

The country’s economy has been driven by a state-of-the-art port complex, among the most sophisticated in the world. The size of its economy limits its ability to diversify production and increases its reliance on foreign markets, making it more vulnerable to market downturns and hampering its access to external capital. The country has low agricultural productivity as only 4percent of its land is arable, hence relying on imports for food supply.

On the Neil Economic Scale, the price of a can of coke in Djibouti is 90 DJF (Djiboutian franc) (R7.48) and the price of a litre of petrol is 220 DJF (R17.30). The inflation rate is around 2.18percent.

Djibouti’s Doing Business ranking improved from 171th in 2016 to 99th in 2018. The government continues to focus on financial-, telecommunications- and trade-related services, solidifying the country’s position as an important regional business and trade hub in the Horn of Africa.

The government of Djibouti has maintained a good and stable political environment. Governance issues are not part of the list of problems.

However, it has significant environmental problems – deforestation, desertification, water pollution and the protection of its wildlife. The country remains with great potential bigger and greater than its size.

Neil De Beer is the president of the IFA and advises numerous African states on economic development. www.ifa.africa or neil@ifa.africa