Interview with Mr. Hassan Ahmed Boulaleh, Minister of the Economy, Djibouti
Mr Boulaleh is a young and dynamic Minister of the Economy, with many different portfolios under his umbrella. He was recently appointed minister, but before entering into this position he had been, among other things, lecturing in economy and international law at the University of Djibouti. He was in Geneva recently and we had the opportunity of meeting him.
Q: Your Excellency, could you tell us about the economic situation in your country?
The economy of Djibouti grew by 5.8% in 2012, but we hope to have an even higher economic growth rate next year. Since the financial crisis in 2008 there was a slowdown of the economy, but with all the projects that are currently underway, growth could easily be a two digit number by 2014.
Countries in the sub-region ‒‒ South Sudan and Ethiopia ‒‒ are more and more using Djiboutian infrastructure, such as the port facilities. These countries too have dynamic economies, so we benefit from a multiplier effect.
We also export strategic services. We rent out military bases to the United States, France, Japan, etc., and this has in the past represented approximately 25% of our gross domestic product (GDP). This proportion is now decreasing, but nevertheless it still amounts to between 15 and 20%. We also export other products from member countries of the Common Market for Eastern and Southern Africa (COMESA).
The country is exporting services. In a recent study carried out by the World Bank, it was noted that the tourism sector could potentially represent 10% of the GDP, so this is a sector that we are currently intending to develop further. Geographically, we are not too far away from Egypt and, with the recent problems in that country, we hope to attract more tourists. Ethiopia is a land-locked country with the result that there is more and more integration between our two countries. Therefore, we also hope that tourists who visit Ethiopia could then spend a couple of days in Djibouti to benefit from our sea coast. In Ethiopia there is a lot of archaeological sites and much to visit, but they do not have any beaches or access to the sea. We are at the junction between the Indian Ocean and the Red Sea, and we have splendid beaches. We also have one unique feature: during several months of the year, you can swim with whales ‒‒ something that is quite unique in this world. We have Lake ’Assal, the lowest area of water in Africa, a lake similar to the one you find in Jordan ‒‒ the Dead Sea. As I said, given the trouble in the Middle East, we hope that many tourists will be tempted to come to us and discover something new.
Tourism in Djibouti is a strategic sector which we will develop. Currently, the infrastructure is a little lacking, but it is only a matter of time before we will remedy this situation. In fact, one of the reasons for my presence here is to promote tourism, and to develop tourist services. There would be whole new areas that would be dedicated to the development of this sector. We are currently putting in place a marketing programme so that people understand that Djibouti is an interesting tourist destination.
Djibouti is a small country and you really have to promote it for people to see it from another angle. In Djibouti there is a programme for the development of the infrastructure, for instance, of maritime transport. We are planning to build three or four new harbour complexes in addition to those we already have.
Currently we are also building a railway that will link Djibouti and Addis Ababa. The investors are mainly Chinese, together with some other countries and donors.
We have a set up a programme called Vision Djibouti 2030 which, if it materializes, would enable us to be counted among the emergent countries, whether in human capital development or infrastructure. There would be special economic zones favouring tourism, as well as industrial production units which will not only produce what we consume ourselves but also lead to exports in the fields where we have comparative advantages.
Q: Do you have universities in Djibouti?
Of course we do! I was a teacher there for twelve years and I taught mainly economics and occasionally law. I am an economist by training.
Djibouti is currently an LDC ‒‒ a least-developed country, a poor little country ‒‒ and we know that what we do now must be multiplied by ten to make it very visible. If we say we want to build a port, one is not sufficient.
The geo-political situation between Ethiopia and Eritrea helps us a lot. When the war between Ethiopia and Eritrea broke out in 1973, Ethiopian maritime trade shifted towards Djibouti. Business exploded. The President of the Republic had the vision that we must prepare our port infrastructure, taking into account the needs and requirements of our neighbours. The entire infrastructures that we put in place become saturated shortly after its introduction. This is the reason why we enlarged the port facilities at Doraleh. In addition, we have improved the roads leading to Ethiopia.
To sum up, our economy is mainly related to the infrastructures of business and transport services, and it represents roughly about 40% of GDP.
We have a good political leadership, with a President who has a dynamic vision. He says: “today we will do this”, and then we do it. Similarly, he decided to develop the regional poles and this work continues with each region being competitive. We are putting in place regional clusters and are currently investing in human capital to train people. We are indeed doing a lot of things to develop our country.
Then there is the energy sector, and the link with Ethiopia ‒‒ something that will give us a chance to have an adequate electricity supply at lower cost.
Q: What do you do to encourage the development of the local economy?
Upon taking office, one of the first things I wanted to do was to improve the business climate in Djibouti and to facilitate the creation of companies. One of my very first actions was to gather together all of the administrative services that were involved in the creation of companies and to put them in the same geographical location. In this one place you will find all that it takes to start a business. If you are working in the informal sector this is also the place to formalize your company and take advantage of a number of services, such as access to the social security system, etc. Our informal sector is quite big and it’s important to include it into the mainstream of economic life.
Once a business is established, it should not be left alone. Often it needs to be supervised so as to have access to loans, and especially to foreign investors. For instance, if today an investor comes and says I need to create a ten-hectare industrial pole, someone must be there to assist him or her to identify a piece of land, how much it costs, etc.
We also want to give the potential investor a chance to be well informed before coming to Djibouti and for this reason we are currently setting up a webpage where he or she can find all the requirements and the necessary information, etc.
Q: So how much time does it take to start a business?
At present we have not given any specific time, but when we will have had the experience of 100 companies, we will be able to make an estimate of time. We already reduced the time from approximately thirty days to four days. Now we think that once the webpage is operational and that the services are all located in one place, it would be about seven or eight hours. Our model is based upon the one you find in Rwanda, where it takes this amount of time to set up a company. We hope that shortly our administration will be able to do the same.
Q: What do you offer to investors?
For foreign investors it all depends how much they are prepared to invest in Djibouti. Concerning exoneration regimes, if the amount is over 50 million Djibouti francs the incentives are even better –‒ fiscal, land, taxes, import and VAT exonerations. There are quite a lot of measures for an investor who wishes to invest in Djibouti. We want to ensure that the investors obtain a quick return on their investment. Therefore, we put everything in place to make them happy.
Q: What about the free flow of capital?
Djibouti has had a liberal economy since its independence and there is no problem. Whoever invested in Djibouti can repatriate benefits without a problem. We have a convertible currency linked to the U.S. dollar. It is a very open economy.
Regarding money laundering and being aware of terrorist organizations, we do of course want to know who the investor is and whether he has a sound signature. It is difficult to bring dirty money into Djibouti as, like everywhere else, we have signed agreements with the United Nations and other international institutions concerning this problem.
Q: Is there another field close to your heart?
I am a delegate minister of commerce responsible for small and medium enterprises, crafts, tourism and formalization, and I’m very interested in developing the crafts sector.
We have very good craftsmen in Djibouti. Unfortunately, they are not very visible in the economic landscape, and this is the reason why we are planning to construct a village reserved for craftsmen. If you look at Senegal, crafts represent 10 to 15% of GDP. One of the missions of our department is to formalize this sector. The craftsman is someone who just evolved out of any system. It could be a woman who makes cloth, but you will never see her ‒‒ she’s invisible. On 27 June, this year, we organized Artisan Day for the first time in the country’s history. The old city was full of craftsmen and women selling their wares. It was a tremendous success and even the First Lady honoured us with her presence.
Leaving this dynamic minister to his endeavours and his busy schedule, we wish him lots of success in all his undertakings, and hope to see Djibouti on the tourist destination maps shortly.