DJIBOUTI CITY, 4 May 2021 – Djibouti’s President Ismail Omar Guelleh, who won a landslide 98 percent of the vote, has started a record fifth term in office.
Analysts expect Guelleh, who has been in power for over 22 years, to be tested by major regional shifts, particularly related to its key financial partner, neighboring Ethiopia.
Djibouti has provided the principal maritime harbor for imports and exports to and from landlocked Ethiopia since 1999.
Since 2013, an estimated 85 percent of all activities on ports in Djibouti derived from Ethiopia’s import and export transactions, according to World Bank data.
With a population of 112 million inhabitants, Ethiopia is Djibouti’s biggest customer, relying on Djibouti’s ports and transport-related infrastructure for 95 percent of its maritime trade.
The conflicts in Ethiopia’s Tigray, Ahmara, and Oromo regions as well as a border conflict with neighboring Sudan are forecast to weaken transactions between Djibouti and Ethiopia, likely leading to job losses in the ports and potentially worsening internal socio-economic grievances in Djibouti.
Beyond the adverse effects of the COVID-19 pandemic, political instability in Ethiopia could have a disastrous economic effect on the economy of Djibouti.
The country experienced a one percent slowdown in economic performance in 2020 but is predicted to grow by six percentage points in 2021, according to forecasts by the International Monetary Fund.
Political grievances are expected to continue to be minimal, given Guelleh’s repressive rule and the absence of a credible opposition.
The main opposition political party boycotted the last presidential ballot held on 9 April 2021, accusing the Guelleh administration of organizing an election lacking in fairness and transparency.
About 85 percent of Djibouti’s gross domestic product (GDP) is dependent on the service sector, which includes ports, logistics, and related services.
Strategically located, Djibouti serves as a Red Sea transit point on the world’s busiest shipping lanes connecting Europe, the Middle East, and Asia.
The global war on terror and piracy in the waters off Somalia’s coast has also made Djibouti a desirable location for foreign military bases.
Independence for Eritrea meant Ethiopia had no outlet to the sea and left it almost entirely dependent on Djibouti for its maritime trade.
The Ethiopian government recently bought a 19 percent stake in Berbera Port in Somaliland to diversify its maritime outlets. Developments are also underway to use the Ports of Massawa and Assab in Eritrea, and Addis Ababa has expressed interest in Port Sudan in Sudan.