China has set its sights on constructing the largest free trade zone set to build the largest free trade zone in the Horn of Africa, Djiboutian Finance Minister Ilyas Moussa Dawaleh has said.
The Horn of Africa is a peninsula in Northeast Africa. It juts hundreds of kilometers into the Arabian Sea and lies along the southern side of the Gulf of Aden. The area is the easternmost projection of the African continent and a historically prime hub for shipping and trading.
Dawaleh said China plans to set up the trade zone in Djibouti, which aims to re-envigorate the merchant industries in that corner of Africa.
“The FTA, which covers an area of six square kilometers [2.3 square miles], is aimed at stimulating China’s presence in Africa and the Red Sea regions,” he said.
“The FTA agreement between Djibouti and China embraces catalyzing custom affairs, monitoring and using international standards at shipment checkpoints, and producing some Chinese goods in the country,” he added.
According to analysts, the ports of Horn of Africa were turning into economic hubs, primarily due to increasing competitiveness between Arab countries and foreign investments.
Somali-based economist, Abdullah Taher, said there was a 21-year agreement between Dubai-based Jebel Ali Free Zone, one of the world’s largest free trade zones, and Djibouti port.
As of December 2014, China has owned a share in the construction of the Port of Djibouti, located at the intersection of one of the busiest shipping routes in the world that links Europe, the Far East, the Horn of Africa and the Persian Gulf.
China will provide primary funding of over 90 percent of the project, while other investors will fund the balance.
China is an important economic partner for Djibouti, providing funding for several major projects, including for the construction of a railway between Djibouti and Ethiopia.