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Djibouti Country Overview

Summary


Djibouti is situated in Northeast Africa on the Gulf of Aden and the Bab-el-Mandeb, at the southern entrance to the Red Sea. It lies between latitudes 10° and 13°N, and longitudes 41° and 44°E. The country's coastline stretches 314 kilometres (195 miles), with terrain consisting mainly of plateaus, plains and highlands. Djibouti has a total area of 23,200 square kilometres (8,958 sq mi). Its borders extend 506 km, 113 km of which are shared with Eritrea, 337 km with Ethiopia, and 58 km with Somalia.



The French Territory of the Afars and the Issas became Djibouti in 1977. Hassan Gouled APTIDON installed an authoritarian one-party state and proceeded to serve as president until 1999. In 1999, Djibouti's first multi-party presidential elections resulted in the election of Ismail Omar GUELLEH; he was re-elected in 2005 for a second term and in 2011 for the final term of the Presidency. The present leadership favors close ties to France, which maintains a significant military presence in the country, but also has strong ties with the US. Djibouti hosts the only US military base in sub-Saharan Africa and is a front-line state in the global war on terrorism. There are few other military or navy bases including that of Japan, German, Denmark, etc.


Demographics
 

Djibouti is a multiethnic country. The two largest ethnic groups are the Somali (60%) and the Afar (35%). The Somali clan component is mainly composed of the Issas, and Gadabuursi. Both are sub-clans of the larger Dir; the Issas form part of the Madoobe Dir, while the Gadabuursi are part of the Madaluug Dir. The remaining 5% of Djibouti's population primarily consists of Arabs, Ethiopians and Europeans (French and Italians). Most local residents are urban dwellers; the remainder are pastoralists. Djibouti's population is predominantly Muslim. Islam is observed by 94% of Djibouti's population (about 740,000) (2010 estimate), while the remaining six percent follow Christianity.
 

Geography
 

Djibouti straddles the intersection of three of the world’s tectonic plates, the Arabian, African (Nubian) and Somalian continental plates, which are slowly pulling apart. This intersection of the African and Somalian plates continues south into East Africa as the East African Rift Valley, while the junction between the African and Arabian plates goes north forming the Red Sea. It is off Djibouti,
 

There is not much seasonal variation in Djibouti's climate. Hot conditions prevail year-round along with winter rainfalls. Mean daily maximum temperatures range from 32 to 41 °C (90 to 106 °F), except at high elevations, where the effects of a cold offshore current can be felt. In Djibouti city, for instance, average afternoon highs range from 28 °C (82 °F) to 34 °C (93 °F) in April. Nationally, mean daily minimums usually vary from about 15 to 30 °C (59 to 86 °F). The greatest range in climate occurs in eastern Djibouti, where temperatures sometimes surpass 41 °C (106 °F) in July on the littoral plains and the freezing point during December in the highlands. In this region, relative humidity ranges from about 40% in the mid-afternoon to 85% at night, changing somewhat according to the season.
 

Politics
 

Djibouti is a semi-presidential republic, with executive power in the central government, and legislative power in both the government and parliament. The parliamentary party system is dominated by the People's Rally for Progress (RPP); the President is currently Ismail Omar Guelleh. The country's current constitution was approved in September 1992. Djibouti is a one party dominant state with the People's Rally for Progress in power. Other parties are allowed, but the main opposition, Union for a Presidential Majority, boycotted the 2005 and 2008 elections leaving all of the legislative seats to the RPP.

Economy
 

The economy of Djibouti is based on service activities connected with the country's strategic location and status as a free trade zone in northeast Africa. Two-thirds of the inhabitants live in the capital city, the remainder being mostly nomadic herders. Scant rainfall limits crop production to fruits and vegetables, and most food must be imported.


The government of Djibouti welcomes all foreign direct investment. Djibouti's assets include a strategic geographic location, an open trade regime, a stable currency, substantial tax breaks and other incentives. Potential areas of investment include Djibouti's port and the telecommunications sectors. President Ismail Omar Guellehh first elected in 1999, has named privatization, economic reform, and increased foreign investment as top priorities for his government. The president pledged to seek the help of the international private sector to develop the country's infrastructure.



Djibouti's main economic asset is its strategic location. The city of Djibouti, capital and home to nearly two-thirds of the country's population, is a major transhipment port and bunkering facility. Good transportation infrastructure with the country and  inks to neighbouring African states earns Djibouti much-needed transit taxes and harbor fees. Trade through Djibouti increased significantly during the Ethiopian - Eritrean war when Djibouti became the only significant port for landlocked Ethiopia.



For the president, Ismail Omar Guelleh, Djibouti is “a stable nation in perpetual quest of sustainable development. It is a land of encounters and exchanges where different civilizations are interwoven without rejection”. Globalization is a chance for the country, and not a misfortune. Located on the Bab el Mandeb Strait, at the tip of the Red sea, Djibouti aims to become, as did Dubai, Hong Kong or Singapore, a major crossroads for trade in goods and services between, on the one hand, Africa, the Middle east and Asia, and on the other hand, Europe, the Indian Ocean and the Atlantic Ocean via the Mediterranean sea and the Suez Canal.


Djibouti provides services as both a transit port for the region and an international trans-shipment and refueling center. It has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to help support its balance of payments and to finance development projects. Salt Investment, a Djiboutian company, is overseeing a $70 million operation to industrialize the collection of Djibouti’s plentiful salt in the Lake Assal region.


There are gold miners from India, geothermal experts from Iceland, Turkish hotel managers, Saudi oil engineers, French bankers and American military contractors. Investors from Dubai have leased the country's port, in an effort to develop the area as a gateway to the region.

 

Investment Climate
 

The Government of Djibouti (GODJ) recognizes the crucial need for foreign investment for the economic development of the country. Djibouti's assets include a strategic geographic location, an open trade regime, a stable currency, substantial tax breaks, and other incentives. Potential areas of investment include
 

Transport/Shipping: Djibouti's service-based economy revolves around its port business. A new fuel pier was dedicated in 2006, and a new USD 400 million container terminal in 2009;
 

Services Sectors: Djibouti's financial services sector continues to grow, as do port-related services such as freight forwarding. There is also a lack of specialized medical care in Djibouti; many residents and expatriates currently travel abroad to receive such care;
 

Energy: Djibouti has renewable energy potential in geothermal, wind, and solar. The government has signed agreements with several private companies and with other countries to begin developing these resources;

Tourism: A large resort hotel complex, managed by the Kempinski Hotel Group, opened in October 2006 and recently completed an expansion. Unique eco-tourism and dive tourism resources exist but are underexploited;
Manufacturing/Fishing Sectors: Djibouti currently imports almost all consumer goods; only small-scale fishing operations are present.

 

Djibouti's laws encourage foreign investment. In principle there is no screening of investment or other discriminatory mechanisms. Certain sectors--most notably public utilities--are state-owned and are not currently open to investors. Dubai World Group currently manages the Port of Djibouti (since 2000), Djibouti International Airport (since 2002), and Djibouti Customs (since 2005).
 

Mining
 

Mining and manufacturing in Djibouti accounted for 3 percent of the gross domestic product (GDP) in 2004, which stood at around $1.6 billion. Djibouti has been known to produce occasional small quantities of clays, granite, limestone, marble, salt, sand and gravel, and crushed and dimension stone for domestic construction projects.
There was no cement production in the country; most imports came from Persian Gulf countries. Other mineral occurrences of potential economic interest included diatomite, geothermal fluids and mineral salts, gold, gypsum, perlite, petroleum, and pumice.


Salt was the only mineral produced in 2004. Extracted from evaporated pans by artisanal miners in the marshes of Tadjoura, salt production fell sharply from the 173,099 metric tons produced in 2001 to an estimated 30,000 metric tons in 2004. The government hoped to establish, by the end of 2002, a fiscal, institutional, and legal framework to support the development of domestic natural resources. The government also planned to promote the use of local materials in construction and public works. The outlook for the mineral industry was for little growth in the short run; constraints included small domestic markets, minimal known natural resources, and slow GDP growth.


In 2009, the small East African country of Djibouti was a producer of perlite, salt, and such construction materials as basalt (table 1). Djibouti’s production and consumption of minerals were not globally significant.

 

Production


Salt production started on a semi-industrial scale at Lake Assal in 1998. Production increased from 2004 to 2008 because of the resumption of demand from Ethiopia. Production had nearly ceased in 2004 because of a 53% tariff that Ethiopia imposed in October 2003 on salt imports from Djibouti. Perlite mining started in 2009.


Structure of the Mineral Industry. 
Salt production at Lake Assal and perlite production were carried out by privately owned companies. Small amounts of salt were also produced at Doraleh by artisanal miners
.


Gold:- There are currently no gold mines operating within Djibouti although active exploration is continuing.

 

Perlite:- In April 2009, the Government granted JB Djibouti Mining a mining license for a perlite deposit near Ageralayta. JB Djibouti Mining started a pilot mining project; the company planned to start large-scale mining in August 2009 (JB Group, 2009).


Salt:- Djibouti’s salt production was limited by reliance on the Ethiopian market, the absence of reliable water and energy supply, and an inadequate regulatory framework. Other constraints included poor working conditions and a lack of iodization machinery.