Afreximbank to finance Djibouti oil infrastructure

Djibouti, a small East African nation aspiring to solidify its position as a regional transshipment hub for trade, has secured $155 million in financing for oil infrastructure projects. The funding was provided by a group of lenders, including the African Export-Import Bank (Afreximbank) and the local lender Banque pour le Commerce et l’Industrie Mer Rouge.

Great Horn Investment Holding (GHIH), a Djibouti government-owned investment entity, received a $120 million facility from Afreximbank. The funds will be utilized to enhance the Damerjog Industrial Development Free Trade Zone by completing an oil jetty, providing ships with access to the free trade zone, and constructing a 150,000m³ oil tank farm. The Moroccan firm, SOMAGEC, has been selected to carry out the development projects.

Additionally, Banque pour le Commerce et l’Industrie Mer Rouge provided $35 million towards the financing, further supporting Djibouti’s plans to become a key transshipment and logistics hub for global trade.

With a population of just over 1 million and limited natural resources, Djibouti aims to leverage its strategic location along the Bab‑el‑Mandeb strait. Approximately 30% of commercial shipping passes through this strait en route to the Suez Canal and the Red Sea. By capitalizing on its unique geographic position, Djibouti intends to offer a gateway for ocean-borne freight and become a significant player in the region’s trade ecosystem.

The financing agreement will also play a role in boosting intra-African trade, considering Djibouti’s economy primarily relies on providing marine services to neighboring countries like Ethiopia and Somalia. By enhancing its infrastructure and trade capabilities, Djibouti can offer efficient maritime access to its landlocked neighbor, Ethiopia, which is one of Africa’s most populous nations and largest economies.

The Djibouti-Ethiopia corridor, an essential trade link, recently received a boost when the International Development Association (IDA) pledged a $730 million grant for upgrades. This comes amid concerns over road quality and insufficient capacity to accommodate the growing truck traffic. Over 95% of Ethiopia’s import-export trade, by volume, relies on the Addis-Djibouti corridor.

The Chairman of GHIH, Aboubaker Hadi Omar, emphasized that the investment would not only enhance the efficient movement of petroleum products but also contribute to developing a core economic belt with Ethiopia and eventually creating an industrial base for East and Central Africa.

By investing in oil infrastructure projects and strengthening trade links with neighboring countries, Djibouti is positioning itself as a critical player in regional trade and an essential transshipment hub connecting Africa to global markets.