Egypt has secured a strategic foothold in Djibouti’s maritime infrastructure, with state-owned and private firms signing a series of agreements to develop a new multi-purpose terminal, a regional logistics hub, as well as a solar power plant in the East African nation. The agreements place the Holding Company for Maritime and Land Transport (HCMLT) and Elsewedy Electric at the center of Djibouti’s logistics push.

Here is a quick rundown of what was signed:

  • State-owned HCMLT signed a terms of agreement to develop and operate a multipurpose terminal in collaboration with Djibouti’s state-owned Green Horn Investment Holding;
  • Elsewedy Electric and HCMLT agreed to co-develop and launch a regional logistics center inside Khor Ambado Freezone, which falls under the China-backed Djibouti International Freetrade Zone (DIFTZ);
  • Elsewedy Electric also signed a terms of agreement to build a solar power plant in Doraleh Port.

Why it matters

The agreements give us a permanent foothold in the main sea lanes that landlocked Ethiopia uses for trade and come just days after Ethiopia’s ambitions of gaining access to the sea got a boost from Israel’s recognition of Somaliland, where Ethiopia has the kernel of an agreement that could give it a port. The Addis-Djibouti Corridor is responsible for 95% of Ethiopia’s trade.

PLUS- These moves may be about more than just commercial logistics. Reports from TheNational and regional observers suggest the infrastructure upgrades, which may also include assets at Eritrea’s Assab port, feature berths specifically designed for Egyptian naval vessels, including submarines and helicopter carriers from the Southern Fleet. That would give the Egyptian Armed Forces a permanent resupply point at the Bab El Mandeb Strait.

The China factor: China’s infrastructure investments in East Africa are the main reason why Djibouti is Ethiopia’s main trade gateway. The USD 4 bn Addis Ababa-Djibouti Railway is the crown jewel of the Belt and Road Initiative in Africa, connecting Ethiopia’s industrial heartland directly to the Doraleh Port through a 750km line.

BACKGROUND: Egypt first announced the package of agreements in April. A statement from Ittihadiya said we were also looking to work on the RN18 road corridor linking to Doraleh port.

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