Djibouti has had tremendous investment promotion success over the last five years
and is now one of the leading FDI areas in Africa. Its government has decided to use
its Red Sea position and proximity to Ethiopia to the West and the Arabian Gulf to
the East, as the driving theme for major investment promotion. But it also
recognised that location alone is not enough, so over the past five years it
established a Djibouti Free Zone (DFZ), and a new, more modern, foreign investment
regime that would support new direct investment into that Zone.
Undoubtedly, Djibouti has 'location, location, location' to sell and the country is now a central food aid distribution center, and it boasts a new luxury hotel.
In addition, there have been significant moves to liberalise 
and facilitate trade with Ethiopia. There have been agreements to
co-locate customs operations at the Djibouti Port. The two countries are also
working towards adopting harmonized clearance and inspection documents and
procedures. The DPW is building 'joint' facilities at the new port at Durlaleh so
goods can transit freely into the Ethiopian market. Such innovations lower overall
distribution costs, and the positive impacts will extend across the Horn of Africa.
The main catalysts have been the DFZ and leading investments in it by such groups as Dubai Ports World and, more recently, by Bahrain Maritime and Mercantile International (BMMI), and parallel investments such as the Kempenski Hotel.
Djibouti has set the stage for exponential growth. By partnering with groups such as Dubai Ports World and BMMI, the country's leadership has proven itself savvy at investment promotion. By creating the Djibouti Free Zone and engineering a less burdensome regulatory environment, it shows openness to trade and foreign investment. And by taking a prominent role in leading its neighbors to peace-especially Somalia, but also Ethiopia- it has demonstrated a commitment to regional stability. Simply put, no other country in the Horn of Africa has moved so decisively in the direction of economic and political reform.
