Djibouti begins construction of massive free trade zone

President Ismail Omar Guelleh (Middle) and Hu Jianhua, vice president of China Merchant Group (R)

On Monday January 16 Djibouti began construction of a large free trade zone in the country. Located 23km from historic central Djibouti City the USD 3.5 billion trade center will cover 4,800 hectares, according to the Djibouti government.
President Ismail Omar Guelleh and the vice president of China Merchant Group were present to witness the inauguration ceremony.
Djibouti has been aggressively expanding its logistics hubs recently.
China’s state firm, Dalian Port Corporation Limited, is building the free trade zone which will feature manufacturing, transport, electronic trade and regional distribution businesses, conference facilities and international exhibitions, residential housing, hotels and tourist centers as well as a park for the petroleum industry. It will be located at a place called PK 23. The Djibouti Ports and Free Zone Authority will operate it in under a joint venture with China Merchants Holdings.
It is a huge project that will be carried out by a Chinese conglomerate, the China Merchant Group. President of Djibouti said he expects the first factories at the site to begin production by October of this year and expects around 15,000 jobs to be created by the trade zone.
The agreement to build the free trade zone was signed in March 2016 as part of China’s bid to expand trade routes, a series of infrastructure initiatives stretching across 60 countries that the Chinese have dubbed “One Belt, One Road”.
The future free zone should lead to the industrialization of the country and the regional anchoring of its economy.
Djibouti is a major import export trade hub for neighbouring Ethiopia, the country with the largest population that does not have a seaport.
Djibouti hopes to expand trade with other countries in Africa in addition to Ethiopia. It will create a unified customs system with China, establish a transit trade centre and set up a currency clearing system in the new facility.
Chinese companies are also expanding Djibouti’s Doraleh Multipurpose Port, estimated to cost USD 590 million which is scheduled to begin operating this year. They are also building two new airports at a combined cost of USD 599 million.
The government of Djibouti is spending USD 12 billion on infrastructure, while its GDP is only USD 2 billion.
A week ago the country inaugurated a railway line connecting it with Ethiopia.
The Chinese CCECC, which undertook the railway project, has also begun building the tallest mixed use building in Djibouti, at 23 stories highg