This integration is especially evident in the case of Ethiopia. Indeed, both countries enjoy a symbiosis relationship. Djibouti notably provides a maritime front to Ethiopia, while Ethiopia provides, among others, electricity and fresh water to Djibouti. The relationship between Ethiopia and Djibouti is so strong that Ismaïl Omar Guelleh, Djibouti’s President, said in 2014 that “Ethiopia is Djibouti and Djibouti is Ethiopia, no difference at all.”
However, the country is also a member of the Common Market for Eastern and Southern Africa (COMESA), and can effortlessly access its 21-country market of over 497 million people, including such countries as Egypt, Libya, Democratic Republic of Congo, Rwanda, and Madagascar. It also benefits from preferential access to the European market—through the African, Caribbean and Pacific Group of States and European Union (ACP-EU) partnership agreement—as well as to the United States market—through the African Growth and Opportunity Act.
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The Djibouti Port and Free Zone Authority (DPFZA) acknowledges that the best way to explore the advantages of its strategic location and ground, sea, air transportation synergy is to develop free trade zones in Djibouti aiming at attracting more investors who can contribute with their experiences and capital to the development of Djibouti’s economic.
There are two free zones in Djibouti as of today. The first one is a historical free zone located inside the port of Djibouti. A second and larger dedicated free zone called Djibouti Free Zone (DFZ) was opened in 2004. It spans 17 hectares of land, office space and storage facilities, and is located between the Port of Djibouti and the Doraleh Container Terminal. It employs more than 1,000 people, mainly in the sector of light goods manufacturing, redistribution and general trading.
The new Djibouti Free Trade Zone (DFTZ) will be developed in the Project Area to be declared as Free Trade Zone, consisting of the Core Free Trade Zone District with an area of 48.2 square kilometers (32.8 km² land area and 15.4 km² sea area). This “mega-project” is expected to create 200,000 jobs over ten years. The framework agreement was signed on March 25th 2015 together with CMHI (China Merchants Holdings International).
Another free zone project was approved during a Cabinet meeting on May 2015. This free zone, called Cargo Freight Village, will be dedicated to air cargo in order to link it with sea logistics and develop sea-air cargo to serve landlocked countries in Central and West Africa. This multi-modal system is also expected to serve Western Europe and the East Coast of the Americas. The establishment of Air Djibouti Cargo airlines will expedite this process and, to accomplish this, the first dedicated Boeing freighter will commence operation on June 2015.
Benefits for businesses establishing within Djibouti’s free trade zones are numerous, including corporate tax exemption and the ability to repatriate all capital and profit. There is no requirement for a local partner, nor is there a foreign exchange control.
A system called One-Stop Shop offers businesses all necessary administrative services such as applications for visas, work permits and driving licenses, as well as registration of vehicles, in one single location.
The new Djibouti Free Trade Zone is already taking reservations from companies around the globe, particularly companies from export-based economies. The African continent is on the move and its consumer base is growing at a fast rate. Companies that are closer to their customers will have advantage over those companies trading from afar because they can serve their customers faster and more efficiently.