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EXXAfrica EXXAfrica: THE MIRAGE OF DJIBOUTI'S ECONOMIC SUCCESS 25-May-2018 / 18:45 GMT/BST THE MIRAGE OF DJIBOUTI'S ECONOMIC SUCCESS Despite high growth and basking in a favorable spotlight, nationalist interventions in the economy and weakening political stability indicate that the current mirage of Djibouti's investment potential is overstated and unsustainable. LONDON, United Kingdom, May 25, 2018/APO Group/ -- EXX Africa https://www.exxafrica.com/ published a special report on the country's investment outlook on 24 May 2018. At first sight, *Djibouti* seems to be an attractive investment destination in an otherwise troubled *Horn of Africa* region. The country's apparent political stability is assured by the presence of multiple foreign military bases and relatively low exposure to *regional security threats*. Djibouti's strategic location near the *world's busiest shipping lanes*, controlling access to the *Red Sea* and *Indian Ocean*, continues to attract investment from African, western, Asian, and Gulf investors, particularly in the *marine*, *construction*, *aviation*, *fuel*, and *defense sectors*. However, the *high profile cancellation* of a port terminal *concession* earlier this year has raised questions over Djibouti's attitude to foreign investment. On the one hand, the government is becoming increasingly *nationalist* and seems to be promoting *statist interventions* in the economy. Meanwhile, Djibouti is favoring preferred development partners, arguably in *violation of existing* contractual arrangements. Such interventions are likely to deter further foreign investment in the services sector, while Djibouti's natural resources are negligible. Moreover, while the incumbent president secured a *fourth term* in office on a landslide electoral victory only two years ago, a reinvigorated opposition is now boycotting local elections and vocally insisting on *political reform*. Security forces have taken a heavy-handed approach to *crack down* on opposition supporters and rights activists. By *repressing freedom of speech* and political rights, the government has intensified fractious clan allegiances and increased the prospect of *armed insurgency*. Lack of clarity over the presidential succession is also driving internal rivalries and hampering the longer term policy outlook. Given that Djibouti's bloated public sector economy is dependent on a financial lifeline thrown by *regional powers* and has failed to diversify from the port services sector, in reality the country's investment potential is rather limited. Moreover, *nationalist interventions* in the economy and *weakening political stability* indicate that the current mirage of Djibouti's investment potential is overstated and unsustainable. For any further comment or a full copy of the report, please contact https://www.exxafrica.com/ _Distributed by APO Group on behalf of EXXAfrica._ *Media Contact:* Robert Besseling Executive Director robert.besseling@exxafrica.com https://www.exxafrica.com *About * EXX Africa is a specialist intelligence company that delivers accurate, decision-ready, and commercially relevant forecasts on African political and economic risk to businesses. We embrace the continent's fast changing dynamics and serve our wide-ranging client base to mitigate their risk exposure to Africa's fast-changing political and economic developments. Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. End of Announcement - EQS News Service 689839 25-May-2018
(END) Dow Jones Newswires
May 25, 2018 13:44 ET (17:44 GMT)
