As an African infrastructure-focused banker, one of my favorite places to work in Africa is Djibouti.
No more than 9,000 square miles of land, abutting the Red Sea at the narrow chokepoint from whence it flows into the Gulf of Aden, the country depends for its economic vitality on some of the more interesting accidents of global geography, history and politics. At independence 42 years ago, the country was described (by the New York Times) as a tiny state with “no resources except sand, salt, and twenty thousand camels”. I would have added to the cheery prognosis: oppressively hostile weather, and a terribly difficult neighborhood, geopolitically.
Much has changed since that glum assessment of 1977. In the last decade alone, several billions of dollars in foreign direct investment have flowed into Djibouti’s maritime and transportation infrastructure (uniquely, from a diverse array of sources: European, Asian, African and American, as well as from state-backed and private capital). With each visit to Djibouti, I learn something new about how this small, hardscrabble nation manages to attract substantial amounts of investment (more than 20 percent of GDP on average annually) in spite of its quite significant natural challenges.
Just this past week (over a sumptuous lunch of Red Sea lobster) my primary interlocutor in the country (a senior official of the government-owned Ports company), shared some more of the kind of long-term strategic thinking that underpins the economic success of his country. Djibouti is focused on being competitive for the next 100 years as the premier ports and logistics infrastructure hub in its region. It’s a quite single-minded mission that reveals itself in a multitude of deliberate state actions, small and large.
For example, the design and construction of their existing port infrastructure has already taken into consideration the technical specifications of the next few generations of large, commercial shipping vessels currently being envisaged. With the assistance of multiple financing partners, billions of dollars by value of new projects are now under development, together aimed at ensuring all key elements of an integrated, modern shipping destination are in place, including: repair facilities, ever-expanding container storage capacity, fuel supply infrastructure, interconnecting roads and railways, and a major heavy industrial free trade zone.
More than the financial partnerships to deliver these projects, it is also easy to observe the focus on developing local human capacity for the future operations of these important assets: international maritime scholarship programs (one of which my lunch companion was a prior beneficiary of), as well as commercial joint ventures and advisory partnerships with specialized international institutions in multiple areas.
The mindset of senior leadership is very transparently one of continuous development, in spite of the numerous challenges with governance and politics that are to be found here (like in every African country). Critical to success in attracting finance has been a deliberate focus on establishing appropriate legal and regulatory frameworks, inviting technological and operational expertise, and entering into mutually beneficial commercial investment partnerships in relation to each desired project.
While there have been setbacks large and small, and there is a significant amount still to do in the areas of social infrastructure and broader human development, the general direction of Djibouti has been towards progress away from its inauspicious national origins.
Working simultaneously with leaders in multiple countries across Africa affords me the luxury of perspective in assessing the various current ideas and approaches to commercial and economic infrastructure development. One consistent lesson I have come away with is that the present approach in Djibouti is as close to best practice as there is in Africa.
There is no magic bullet to development, and no substitute for the honest discipline of setting overarching strategic goals, adhering to them in decisions big and small, incorporating the appropriate technical expertise into a long-term planning process, establishing a legal and regulatory framework well-designed for commercial investment partnerships, and empowering key institutions and persons to implement the plan.
Djibouti is not an exception in this regard. Some or all of these key success factors can be found in several other African countries, and much of our work at Africa Finance Corporation is about supporting partner countries (acting through empowered people and partner organizations within those countries) that subscribe consistently to these principles in the area of economic infrastructure development.
In this column over the next few months, I will aim to share as many of these success stories in infrastructure development and financing as possible (and perhaps a few not so successful ones as well). The development challenge in Africa is substantial and rapidly accelerating. This is evident in the epidemic of unemployment, poverty and social infrastructure inadequacy across nearly every country on the continent.
Economic infrastructure is a major (albeit not the only) plank upon which a solution to this challenge rests. The appropriate strategic approaches to securing sustainable long-term financing for important infrastructure works is (and should be) a top-of-mind issue for citizens and leaders everywhere in Africa.
Ultimately, my intention in sharing stories and experiences like the inspiring case of Djibouti, is to provide some ideas and examples that citizens and leaders might rely upon in advocacy and decision making.
Next week, I will share some lessons from another one of my favorite places to work in Africa, Rwanda.
Fola Fagbule
Fagbule, is Senior Vice President, Africa Finance Corporation. His Twitter handle is @folafagbule
