Peace Deal Sounds Echo at Djibouti Port

Jan 1 , 2023


The November peace deal holds the promise of reinvigorating port traffic for the country handling 93pc of Ethiopia’s import and export trade. According to the IMF report, Djibouti’s highly indebted economy hangs on the delicate peace deal agreed upon in Ethiopia. The peace agreement between the federal government and TPLF forces seems to be taking a positive turn as delegates from the federal government gathered in Meqelle, Tigray Regional State, last week. The declining trade has had an underwhelming yield in the infrastructure investment connecting the two countries. Following a late December visit, a team from the IMF led by Brett Rayner advised on results from infrastructure investments in Djibouti. He forecasted that Djibouti’s 2023 economic growth is contingent upon a concurrent peace and rebound of the Ethiopian side since nearly a quarter of government revenue comes from the logistics sector. He ascribed the heavy debt distress of Djibouti’s economy to be arising largely due to infrastructure investments that were supposed to connect Ethiopia to the global market. Ethiopia provides several agricultural commodities to Djibouti, the main one being Khat which accounted for seven percent of all imports in 2020. The country of one million population relies on port traffic from Ethiopia as a significant contributor to its economy, which stands at 85pc of all its port traffic according to data from the World Bank. “Djibouti used to be a desert 30 years ago,” commented one academic in the Ethiopian logistics sector. He referred to Eritrea’s cessation from Ethiopia in 1993 as being foundational to the economic growth of Djibouti over the last three decades. The IMF report suggests that heavy infrastructure projects that were debt-financed to facilitate the smooth transport of goods are at the root of the debt distress faced by Djibouti. Djibouti's debt-to-GDP ratio stood at 72pc in 2021, compounded by a narrow tax base and a large informal sector. The small-scale liberalization of Djibouti’s economy, evidenced by the offering of minority stakes in its telecom sector, did not attract enough interest suggests the report. The near complete monopoly Djibouti had over Ethiopia’s trade was challenged as the new government sought to diversify its port access by jointly developing access with DP World in Somaliland in 2018. DP World, an Emirati multinational logistics company with 80 inland and marine terminals worldwide, was dismissed from Djibouti by a presidential decree that same year. This expropriation act led to a string of lawsuits by DP World, in which eight court rulings amounted to 686 million dollars in damages. Ethiopia’s war in 2020 led to a simultaneous decline in Djibouti’s port traffic, and the international rise in commodity prices aggravated the economic shock and regional drought, suggests the IMF report


Radar

Coffee Exports Bring in $1.5B in Third Quarter

Ethiopia has earned 1.5 billion dollars from coffee exports over the nine months of the fiscal year. The country had set a target to earn a little over a billion dollars by exporting 201,959tns of coffee during the same period. According to Adugna Debella (PhD), director general of the Ethiopian Coffee & Tea Authority, the export strategy continues to focus on major international markets, with the top 10 destinations, including Saudi Arabia, Germany, and the United States (SU), accounting...


Radar

Central Bank Holds Fourth Exchange Auction

The National Bank of Ethiopia(NBE) sold one dollar for 131.4961 birr in its recent auction. It was reported that 26 banks participated in this auction, which took place last week on Thursday. In a statement issued by the National Bank  following the auction, it was indicated that 70 million dollars was offered for the event. Subsequently, it was reported that 96 pc of the foreign exchange needs of the participating banks were met. In the previous auction, held 15 days ago, the bank had of...


Radar

City Registers 64,075 Births in Fiscal Year

The city has exceeded its birth registration target for the first nine months of the fiscal year, registering 64,075 children—71.15pc more than the set goal of 58,342. This success, with a registration coverage rate of 109.63pc, is largely attributed to the efficiency of the one-centre birth registration service system, which has been rolled out across health centres and courts. The total number of vital events registered, including births, adoptions, marriages, divorces, and deaths, reache...