Djibouti Bets on Free Zones as AfCFTA Could Boost Exports by 7.1%

FTZ News: A study presented this week by the UN Economic Commission for Africa and Djibouti’s Ministry of Economy and Finance in charge of Industry estimates that full implementation of the African Continental Free Trade Area could raise the country’s total exports by about 7.1 percent and increase overall national production by 4.8 percent.

The figures appear in modeling that examines tariff reductions and simplified rules under the continental agreement. The largest projected increases fall in manufacturing, food processing, and construction products. In some of those categories the study indicates output could expand by 10 percent or more.

The released summary does not state the base year used for the comparison, the time horizon over which the gains are measured, or whether the percentages represent cumulative long-run effects relative to a scenario without the AfCFTA. Djibouti’s economy has expanded sharply.

The study reports GDP rising from $1.34 billion in 2010 to $4.15 billion in 2025, with GDP per capita moving from $1,605 to $3,501. Growth has been driven mainly by public investment in ports and transport links at the Red Sea entrance. The industrial sector remains limited.

The same assessment identifies 23 active industrial enterprises—14 nationally owned and nine foreign-owned—that together employ 892 workers. Manufacturing value added per capita has nearly tripled since 2011, yet the sector still accounts for only a small share of total output. Women hold ownership stakes in 32.3 percent of enterprises, a share the study places above the sub-Saharan African average.

They also make up nearly one-third of permanent full-time employees. The assessment notes that targeted measures to support women entrepreneurs and workers would be needed if the projected production and export gains are to be shared more widely. Andrew Mold, director of ECA’s Office for Eastern Africa, told the launch meeting that the trade area offers a route to expand productive capacity beyond the existing logistics platform. He said benefits would not arise automatically and that policies would have to ensure women and younger workers see gains.

José Barahona, the UN resident coordinator in Djibouti, said the same numbers indicate regional integration can support more local processing and steadier livelihoods, particularly for younger entrepreneurs. Ilyas Moussa Dawaleh, the minister of economy and finance in charge of industry, said authorities intend to place more processing activity inside existing free zones and planned industrial parks rather than rely solely on transit.

The study itself lists structural constraints that remain: high electricity costs, limited access to finance, skills shortages, and a still-small private sector. It concludes that collaboration among government institutions, private operators, and development partners will determine how much of the estimated 4.8 percent production increase and 7.1 percent export rise is realized. /.