x Abu Dhabi, UAEFriday 28 July 2017

What lessons does Dubai have for Djibouti?

It is no small irony that at the height of its frenetic real estate bubble Dubai managed to trace the outlines of a model for sustainable development elsewhere.

It is no small irony that at the height of its frenetic real estate bubble Dubai managed to trace the outlines of a model for sustainable development elsewhere. This model has the potential to become part of the emirate's legacy that is as durable as its bricks and mortar development.

Consider Djibouti, the African state with the longest and deepest commercial relationship with Dubai. Sandwiched between strife-torn Somalia, Eritrea and Yemen, in 1990 Djibouti was thought beyond hope. Once a strong competitor to other Red Sea port cities like Jeddah and Aden, it was highly indebted, and perceived by the West to be vulnerable to extremist ideologies.

Less than a decade after signing a wide-ranging partnership with Dubai, Djibouti is generally thought to be stable, secure and pro-western. GDP growth has risen to a high of seven per cent, while Dubai-based entities account for an estimated five per cent of growth in local employment.

In 2000, Dubai's port operator DP World (then Dubai Ports International) signed a concession to operate the Autonomous Port of Djibouti, then the country's main port. In the ensuing years, "Dubai Inc" marshalled approximately $1.5 billion (Dh5.5 billion) to build one of the most sophisticated container terminals on the continent. Further investment built a 250-bed business class hotel, upgraded the airport and access roads, and developed customs procedures.

Dubai's coordinated investments enabled Djibouti to create a credit history on the global funds market, and paved the way for access to various multilateral facilities. Private Gulf enterprises followed the Dubai Government, investing in agriculture and real estate and even the country's newest airline.

Five years into the Djibouti experiment, Dubai began a similar process in two other Sub-Saharan countries, Mozambique and Senegal, and two North African countries, Egypt and Algeria. All of these countries have similar characteristics, including pro-business leadership, pent-up demand and inadequate infrastructure. Both Senegal and Mozambique are among sub-Saharan Africa's top economic performers.

What is perhaps most interesting about this process is that Dubai managed to create economic and social benefits without resorting to the tactics of so-called neo-colonial states, which have been widely criticised for their lack of involvement in local communities, questionable ethics, poor safety practices and the large-scale importation of labour. It is also notable that this economic programme was an Emirati initiative primed by investments in Africa's transport and agriculture sectors directed by the UAE's founder, Sheikh Zayed bin Sultan, and the Abu Dhabi Fund for Development.

In the case of DP World, commercial projects go hand in hand with social initiatives like developing port communities, building the health care infrastructure and environmental programmes. The message is that when Dubai arrives, it will benefit more than just the elite few: there will be job creation and significant training, and efforts to save the environment from the effects of rapid development.

Perhaps the most promising example was the conclusion last July of a partnership between DP World, Family Health International, the US Agency for International Development and the government of Djibouti to build a network of clinics along the main road linking the Ethiopian capital to Djibouti's ports. These clinics are expected to provide basic health and education to 30,000 people in 2011. The idea is that within 10 years, most of the major port cities of Africa will be linked to one another and inland population centres through a similar network.

Other forward-looking programmes include employing Djiboutian managers to train a management corps in DP World's other African investments, and a commitment to conserve mangrove forests and coral reefs.

But the outlines of the "Dubai model" are increasingly under strain. DP World continues to invest in Africa and the company's social and environmental commitments are increasing. At the same time, the UAE's own economy is changing, which means many international projects have to wait until better times. The close-knit, informal network that fostered Dubai's investment abroad is also changing.

Dubai hasn't done everything perfectly, but it has done something different - and, so far, it has worked. If the UAE now retreats from its sustainable investments overseas, it will be because of an incomplete understanding of what has been accomplished and what is at stake. Just as Sheikh Zayed realised more than 40 years ago, sustainability and being a good neighbour have the potential to win friends and influence all over the world.

 

Dr Ethan Chorin is a non-resident fellow at the Dubai School of Government (DSG). He will address this topic at a DSG policy forum at 6.30 this evening