Kenya has finally opened its Chinese-built Lamu Port and is preparing to aggressively market the facility, with a particular focus on luring Ethiopian business away from Djibouti. The land-locked country currently receives over 90% of its goods through the small Horn of Africa nation, but Kenya is hoping that the substantial expansion of their processing capacities at Lamu – alongside some attractive discounts on port-related costs – will be enough to seize some of the region’s business.
It’s unclear how effective this strategy will be, in part because Ethiopia is already heavily focused on other projects including a $1 billion trade and logistics corridor linking the country to Berbera, a port in Somaliland. Regardless of what happens with Lamu, however, the principal inhibition to Djibouti’s ambitions of becoming the “Singapore of Africa” are its own legally dubious machinations. After Djibouti already expropriated its port from a private company—many would say unlawfully—the government led by longtime strongman Ismail Omar Guelleh has not helped matters by becoming embroiled in rumours of entering the illegal arms trade, potentially jeopardizing its integrity in the eyes of international observers.
Will Lamu live up to expectations?
Upon its conception in 2012, Lamu was intended to comprise part of a $15 billion Lamu Port-South Sudan-Ethiopia Transport Corridor project, nicknamed LAPSSET, which would mark Kenya out as a major player in regional and international trade on the east coast of Africa. Early projections targeted a capacity of 24 million containers per year and the fourth busiest terminal in the world by 2020. However, the project was beset by problems and delays and only now has its first berth welcomed clients.
Much of its success will hinge upon its ability to secure the lucrative Ethiopian market. As an entirely landlocked state, Ethiopia must rely on its neighbours for access to trade routes – but the fact that Lamu is almost 400km further away from Addis Ababa than Djibouti’s Doraleh port means that it may struggle to win business from its regional rival. Lamu’s proximity to volatile areas of Somalia has also meant that it has come under attack several times by al-Qaeda backed insurgents in the area, making it even less attractive as an alternative to Djibouti. Meanwhile, Nairobi’s ambitions are dampened further by the fact that Ethiopia recently penned a $1 billion deal with DP World of Dubai to develop a trading corridor with the Berbera port in Somaliland.
Djibouti its own worst enemy
Of course, the Ethiopian accord with DP World may sound louder warning signals for Djibouti than the opening of Lamu, since it indicates a willingness from Addis Ababa to explore alternatives to Djibouti in the medium- to long-term. Indeed, Djibouti has only itself to blame—it once had a lucrative partnership with DP World as well, yet in February 2018, the Djiboutian government seized control of the Doraleh Container Terminal from the Emirati company in a move that DP World has called unlawful. Arbitration proceedings have been put in motion in London – in the same court that has already found in favor of DP World on this matter once before.
With its reputation already in the balance, Djibouti’s standing suffered another blow later that same year, after a report by intelligence consultancy EXX Africa found evidence of complicity from the government’s senior officials in the illicit arms trade. According to the conclusions of the report, strong ties between companies owned by prominent Djiboutian politicians and military personnel and known arms smugglers indicate that the government is “aware of… and indeed, actively encouraging” Doraleh’s role in illegal arms trafficking.
Certain individuals were particularly implicated in the EXX Africa report, including Aboubaker Omar Hadi, the chairman of the Djibouti Ports and Free Zone Authority (DPFZA). Hadi allegedly helped establish banks which were subsequently used for laundering the proceeds from the illegal arms trade which has apparently proliferated in Djibouti since the government took over Doraleh. To make matters worse, these allegations of weapons being trafficked through Djibouti’s port have roped in controversial Northern Cypriot banker Bensen Safa, Eritrean financier Isaias Dahlak, whose murky activities apparently include financing Eritrean forces in the devastating ongoing conflict in the Tigray region, and even Ismail Omar Guelleh himself.
The worrying suspicions were lent more weight by the seizure of some $13 million worth of weapons in Ethiopia in March 2020, believed to have made it into the country via Doraleh. Nonetheless, the EU and other major diplomatic powers have been unwilling to address the issue head-on, for fear it may upset their military installations in Djibouti and the regional security that they provide.
Djibouti’s ambitions in the balance
The questionable behaviour of Djibouti’s government is all the more unfortunate because the small country has a lot of natural advantages in terms of international trade. Almost a third of the world’s shipping cargo passes by its shores through the Bab-el-Mandeb strait, more than a million containers were processed in its six ports last year and in Doraleh, it has the most efficient facility in Africa. Its strategic location and relative stability also make it popular among foreign governments, gifting it laxer leeway than many of its peers when it comes to its human rights and corruption records.
However, there will surely come a time when that luck runs out. The potentially illegitimate nature of the government’s seizure of Doraleh is scheduled to be decided upon by a UK court in the near future, while mounting evidence of a conscious dalliance with the illegal arms trade casts grave aspersions on the reliability of the country as an ally in the fight against sub-Saharan insurgency. While the emergence of Lamu in Kenya and the expanded Berbera port in Somaliland have offered international interests an alternative option for the transport of their goods, the truth is that the Djiboutian government is its own worst enemy when it comes to attracting international investors and partners.
