7 May 2017

Towards a Regional Logistics Hub Based On the Singaporean Model?

Djibouti — With a level of fixed investment reaching 34 percent of GDP in 2015, Djibouti is on the track to achieve its ambition to become the logistics hub of the Horn of Africa. In 2016, the country recorded the highest growth rate in the Eastern Africa at 7.2 percent. Nevertheless, Djibouti's commendable efforts have not yet succeeded in significantly reducing the high levels of unemployment and poverty, which remain the country's main challenges.

The unemployment rate, estimated at 39 percent of the working population, us one of the highest in the world, while income poverty affects more than 40% of Djiboutians.

The Djibouti Country Profile, prepared by the UN Economic Commission for Africa (ECA), advocates in favour of focusing greater efforts on human capital investments so as to accelerate the structural transformation of its economy and to reduce the unemployment rate.

The country profile has just been presented in Djibouti at the Institute of Diplomatic Studies of the Ministry of Foreign Affairs and International Cooperation, in the presence of the Secretary General of the Ministry of Economy and Finance, Ms. Mariam Hamadou, as well as other senior government officials, the UN system, and representatives of the private sector.

During the presentation, Mr. Andrew Mold and Mr Omar I. Abdourahman, Acting Directors of ECA's Eastern and Northern Africa offices, respectively, compared the trajectory of Djibouti with the miracle of Singapore in the 1960s and 70s, which was characterized by maintaining high growth rates over a prolonged period, a rapid growth of exports, an elevated rate of investment, and high domestic savings.

Driven by the development of port services, at 5.9 percent on average GDP between 2010 and 2016, the Djiboutian growth performance over the past five years has also been strong. However, productive capacities and exports are still weak, and investment is not underpinned by a high savings rate.

Mold and Abdourahman said that it is essential that the government shifts its priorities towards a faster development of its human capital. Despite a GDP per capita of $ 1,908 - the second highest in Eastern Africa (after Seychelles) - Djibouti maintains a low level of human development, ranking just 172nd out of 188 countries in UNDP's Human Development Index (HDI), while both Kenya (146) and Tanzania (151) rank better, despite having a much lower level of GDP per capita. This poor performance is partly explained by the low level of education in Djibouti, with an average number of years of schooling of 4.1 years in Djibouti, compared with 6.3 in Kenya and 5.8 in Tanzania. While the number of students in secondary school has more than doubled in ten years, the number of students in technical and vocational education in Djibouti also remains below 3,000.

During the subsequent discussions after the presentations, Dr. Fahmi Ahmed Mohamed, Advisor to the Minister at the Ministry of Tertiary Education and Research, stressed that the country has recently been making strenuous efforts to expand tertiary education rapidly, and that the university now has 10,000 students enrolled, compared with just 400 at the beginning of the 2000s.

The ECA country profile explains that the country's investments will only be effective if they generate more inclusive growth and employment opportunities for the Djiboutian people: "To achieve more inclusive growth and realize its economic ambitions, Djibouti needs to focus on technical and vocation education and ensure that skills are improved and better matched to the needs that exist in the growing economic sectors."

Note to Editors

The ECA Country profiles aim to disseminate country- and region-specific policy analyses and recommendations for economic transformation, with an emphasis on promoting sustainable growth and social development, strengthening regional integration and facilitating development planning and economic governance.

You can download the country profile of Djibouti at:

http://www.uneca.org/sites/default/files/uploaded-documents/CountryProfi...

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