PUBLISHED ON October 5th, 2023

EU backs Djibouti in regional connectivity, increased trade

  • The EU is supporting efforts in the Horn of Africa that will boost regional economic integration and trade. 
  • Djibouti’s major trading partner countries include Ethiopia and troubled Somalia.
  • Trade Mark Africa is helping implement a single window system which is already in use across EAC.

The EU has expressed its support for Djibouti’s plan to enhance connectivity within the Horn of Africa, a move that will promote trade with Ethiopia, one of the region’s biggest trade partners.

This collaboration is in sync with the African Alliance for e-commerce, a consortium comprising 18 member countries, dedicated to advancing the Single Window concept. This alignment adheres to the recommendations set forth by international institutions.

A pivotal project within the Alliance is the establishment of a Regional Single Window, designed to seamlessly interconnect all national platforms. The overarching goal is to streamline trade processes, bolstering the competitiveness of African nations on the global stage.

The ninth edition of the International Single Window Conference went down in Djibouti from September 25 to 26. The conference focus was on investment opportunities and ongoing developments across the Africa that will enhance global trade efficiency.

The EU’s involvement in the region is geared towards fostering regional economic integration and facilitating trade in line with the objectives outlined in the African Continental Free Trade Area (AfCFTA). A pivotal element of this partnership is the EU’s support for the Horn of Africa Initiative’s strategy, working in collaboration with the governments of the Republic of Djibouti and the Federal Democratic Republic of Ethiopia.

Promoting economic integration

The EU has allocated €32 million (about $33.6 million) to a dedicated program focused on advancing regional economic integration within the Horn of Africa through the development of the Djibouti corridor. This initiative is executed in collaboration with the Agence Française de Développement (AFD) and the aid-for-trade organization TradeMark Africa (TMA).

The primary objective of this program is to enhance the efficiency and effectiveness of one of Africa’s most vibrant economic corridors, all while fostering inclusive trade practices.

This goal is pursued by leveraging digitalization within government agencies responsible for trade processes. This digitalization aims to reduce the time required for trade document processing and expedite the movement of goods along the corridor, extending from the Port of Djibouti to Ethiopia’s capital, Addis Ababa.

Key trading partners for Djibouti in the region include Ethiopia and Somalia. Beyond the African continent, countries such as Brazil, France, the United Arab Emirates, Saudi Arabia, and Japan rank prominently among its trade partners.

The implementation of electronic Single Windows and cargo tracking systems stands as exemplars of the digital interventions underway to stimulate cross-border trade—a model showing considerable success within the East African Community (EAC).

Djibouti trade – Single Window System

TMA is behind the single window system and One Stop Border Posts in the EAC. This system has reduced the time taken to complete standard import and export processes across the EAC, increase user- compliance with trade procedures, and enhanced trade.

To marshal strategic partnerships that will deliver success, TMA, the implementing partner through this EU programme, has signed partnerships with Djibouti’s Ministry of Trade and Tourism to eliminate non-tariff barriers (NTBs).

This is along the Djibouti Corridor, and align the Djibouti National Trade Policy to the World Trade Organisation’s Trade Facilitation Agreement and the AfCFTA.

This will deepen trade integration with Ethiopia through harmonisation of trade regimes and domestication of common rules and regulation on trade and customs.

The aim is to contribute to a 10 per cent decrease in the cost of trade, 15 per cent reduction in the time to trade, and 30 per cent decrease in time to clear goods at selected border crossings.

The EU supported programme will also increase by 15 per cent the exports in targeted sub-sectors and allow a 15 per cent growth in income of targeted vulnerable group, especially women in trade.

Djibouti Port handles today around 90 per cent of Ethiopia’s international trade.

Rising commodity prices

However, the corridor is battling difficulties. High clearance charges for traders increases trade costs and commodity prices, making EU’s intervention timely.

Noting the progress made and acknowledging the long but rewarding journey ahead, Sylvie Tabesse, Ambassador of the EU to Djibouti and IGAD said: “I am hopeful the work we are doing here will contribute to the reductions in the time and costs of trade.”

He expressed confidence that the programme will improve attractiveness of the region to investors and more importantly, that the people of Ethiopia and Djibouti will access goods on time and at competitive prices.

TradeMark Africa Djibouti Country Representative, Achaa Abdillahi Ahmed, said TradeMark Africa has successfully implemented the single window system concept in East Africa.

“We hope to create more awareness of such efforts, as we build collaborations that will address trade barriers and catalyse increased trade in the horn of Africa region and particularly, the Djibouti-Addis Corridor.”

So far, TMA has done the initial groundwork of the corridor mapping, stakeholder consultations and is settling on the systems for implementation.

“Several other critical elements including automation of certificates of origin, implementation of electronic cargo tracking, implementing a fleet management system and the sanitary and phyto-sanitary e-phyto system, are in progress,” Ahmed, said.

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Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark Africa.