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Last Updated: Sunday, 3 June 2007, 18:43 GMT 19:43 UK
Djibouti reaches out to trade and tourism
By Ginny Hill
BBC News, Djibouti

The cargo vessel Shebelle has just docked at the port of Djibouti, carrying dozens of brand-new trucks.

The cargo vessel Shebelle docks at the port of Djibouti
Djibouti's Red Sea port is a key African shipping hub

Further along the quay, hundreds of porters are splitting a shipment of loose maize into sacks and loading them onto lorries.

A knot of camels is standing around in the livestock hangar, waiting to be sent to the Arabian peninsula.

This expanding shipping hub is located on one of the busiest maritime trade routes in the world.

Landlocked Ethiopia is the main client and Ethiopian Shipping Lines use Djibouti as their home port.

It is a major dropping point for World Food Programme and USAID supplies, which are transported by road or rail to Ethiopia's capital, Addis Ababa. Ethiopia's cash crop, coffee, is exported in bulk.

Now an ambitious investment project plans to turn Djibouti into Africa's biggest shipping terminal, extending its commercial reach throughout East Africa.

The scheme forms part of an integrated business plan, backed by the United Arab Emirates, aimed at transforming this tiny, disadvantaged African nation into a prospering economy and an elite tourist destination.

"We're investing in Djibouti for the long term," says Sultan Ahmed Bin Sulayem, chairman of state-owned company Dubai World.

"We're improving the port, building roads, creating a free trade zone and managing the airport, because experience has shown us that an efficient infrastructure is a powerful contributor to economic growth."

Strategic location

Dubai World subsidiary DP World is spending $300m in public-private partnership with the government of Djibouti to build a new container terminal in a natural deep water port at Doraleh, several miles along the coast line from the capital, Djibouti city.

When the first construction phase is completed by the end of 2008, the port's capacity will increase fivefold.

Guido Heremans, chief executive of the Port of Djibouti, says shipping trade in the Red Sea is predicted to double by 2015 and Djibouti is ideally placed to benefit from the boom.

Map of Djibouti

"Its strategic location halfway between the Mediterranean Sea and the Indian Ocean links Europe and America with Africa, the Arabian Gulf and Asia," he says.

"The new site at Doraleh will be the first port after Suez capable of housing the latest generation of super-size container ships.

"Djibouti is set to become an important trans-shipment point, where latest-generation container vessels will drop their cargoes. Loads can be broken up and sailed on smaller ships to any destination and the same is true in reverse."

Djibouti was chosen for its political stability, as well as its geographical benefits.

A long-standing French military presence in this former French colony and President Ismael Omar Guelleh's positive attitude towards the private sector mean that Djibouti is considered a secure site for foreign investment.

Luxury living

Mr Guelleh's major challenge is job creation in this liberal Islamic democracy, where the unemployment rate is nudging 60%.

The port of Djibouti is already one of the country's biggest employers, with 1,200 full-time workers and 3,500 dockers.

Djibouti President Ismael Omar Guelleh
President Guelleh maintains strong ties with France

There are hopes that the new terminal will generate more jobs, but the full economic potential of the current development project extends beyond the port expansion to its range of supporting businesses.

"It's still early days," says Mr Heremans.

"But already you feel a new sense of optimism in the city."

The recently-opened five-star Djibouti Palace Kempinski was built in nine months on reclaimed land in a Red Sea inlet, anticipating growth in business travel and investment. The hotel franchise is owned by Nakheel, a subsidiary of Dubai World.

"The speed and quality of the hotel's construction shows what can be achieved here in Djibouti," says general manager Bugra Berberoglu. "Next, we are planning to open a casino and a spa and to lay 3km of artificial beach."

In a bid to attract wealthy clients to the new hotel, Mr Berberoglu has developed a tailor-made weekend break with the deliberate allure of glamour pricing.

Djibouti coastline
White beaches and clear water offer good snorkeling and diving

For a million dollars, guests will receive a 24-carat iPod, a diamond-studded satellite phone and French truffles costing $2,500 a piece in their welcome pack.

Clients will cruise the Red Sea at sunset with a private orchestra.

The following morning, they can take a helicopter flight to a dormant volcano crater, where their personal butler will be waiting with lobster and champagne.

Ingredients for the evening meal will be flown in fresh from Sicily and prepared in a field kitchen, surrounded by pink flamingoes and limestone chimney formations, on the shores of Lake Abbé.

Facilities at Djibouti Free Zone are less sensational, but this new initiative could also create hundreds of jobs, with a large market base in the Common Market for Eastern and Southern Africa.

The free zone is being run in partnership with another subsidiary of Dubai World, Jafza International.

Buddies again

"When DP World bought P&O in March 2006, it became the fourth-largest container terminal operator in the world," says Mr Heremans.

The takeover placed DP World in line to manage six major port facilities in the US, prompting a heated and lengthy bipartisan political row on Washington's Capitol Hill.

Downtown Djibouti
The port expansion may help ease Djibouti's high jobless rate

Democrats and Republicans alike feared the move would threaten national security, referring to evidence that two of the 11 September 2001 hijackers were UAE citizens.

DP World eventually sold P&O's American operations to asset managers. But now, DP World and the US military are living cheek by jowl in Djibouti City.

Across the bay from the new container terminal at Doraleh, Camp Lemonier's tented city is home to the Combined Joint Task Force for the Horn of Africa.

This mixed deployment from the navy, marines, army and air force aims to tackle the root causes of terrorism in the region by focusing on diplomacy and development.

Senior US military personnel - and French squaddies - can sometimes be spotted taking rest and recreation at the Kempinski hotel.

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