The first episode of a free-trade zone of Africa looks pretty astonishing on paper
China is clearing its way to secure its position as a global trade leader and launching the first phase of Africa’s prodigious free-trade zone is another milestone in this regard.
On July 5, Djibouti unbolted the first episode of the Djibouti International Free Trade Zone (DIFTZ), a $3.5 billion project that stretches an area of 4,800 hectares.
Enhancement of financial support
Having whereabouts at the intersection of the Red Sea and the Gulf of Aden in the Horn of Africa, Djibouti has given long notices of its geostrategic location as a critical entry point into African markets.
As a petty, barren country, with a population less than one million, it has attracted military installations from various nations including both China and the US. The $370 million, 240-hectare pilot zone comprises four industrial swarms which will subject to trade and logistics, export processing, business and financial support services, as well as concocting and duty-free merchandise retail.
The opening of the zone is being in tune with Djibouti’s hosting of the Africa-China Economic Forum, which showed the way to government officials and the private sector to have the designs of promoting economic collaboration.
The free-trade zone as a zone of hope
Djibouti wishes the international trade zone will not only perk its position up as a trade and logistics hub but will also put its youth in operation. On top of that, it’s hoping it will provide a strategic base for global businesses hankering to access the rapidly growing African market.
Along with Djibouti, the DIFTZ will be managed with three other Chinese companies, namely: China Merchants Group, Dalian Port Authority, and IZP. President Ismail Omar Guelleh lauded the efforts of the Chinese to invest in Africa, calling the trade area “a zone of hope” in an event attended by leaders cargo from UK to Rwanda , Sudan, Somalia, Ethiopia, and the African Union.
The DIFTZ zone is also a fundamental part of the “Belt and Road” initiative, the multi-trillion Chinese project that aims to sink money into the infrastructure projects including railways and power grids in central, west, and southern Asia, as well Africa and Europe.
As part of this mega project, China finished credit for and built a $4 billion, 756 kilometres (470 miles) railway between Djibouti and landlocked Addis Ababa, the continent’s first transnational electric railway.
This year, after calling its contract off with the Dubai-based DP World, Djibouti also signed an agreement to boost up the number of cargo containers handled at the port with the Singapore-rooted Pacific International Lines that toil with China Merchants Port stocks, which thus far has a stake in the Djibouti port.
But China’s continuous involvement in Djibouti has raised concerns with American officials worried Beijing could strong-arm them from the location of their strategic base Camp Lemonier.
And much like Sri Lanka had to hand over a strategic port after struggling to pay its debts to Chinese firms, Djibouti is also among several nations who might be lured into China’s “debt trap,” threatening the nation’s long-term sovereignty.