Sovereign Fund CEO: We Aim to Diversify Djibouti’s Economy beyond Ports, Military Bases

Djibouti recently hosted a major business forum to unlock investment potential. The country’s sovereign wealth fund, responsible for managing state-owned enterprises and catalyzing greenfield investments in strategic sectors, sealed two joint venture deals with private investors during the event.

Slim Feriani, CEO of the sovereign fund, praised the forum as a success. Plans are underway to make it an annual event, aiming to attract more private investors and boost Djibouti’s ambition to establish itself as the economic hub of the Region.

At the end of the Form, the CEO sat down with Ethiopian Monitor (EM) contributor Habtamu Worku Liben and discussed the role of the newly launched sovereign Fund to achieve Djibouti’s economic ambition.

Excerpts:

EM: What are the long and short term targets as well as current engagement priority areas of the Fund in line with Djibouti’s development ambitions? 

CEO Slim Feriani: We have started with a portfolio that the state of Djibouti has put together, with some key assets are 100% state-owned such as Djibouti telecom as well as with 40% stake GHIH, a holding company that has 27 subsidiary companies and all the ports. Djibouti Air is there as well.

Our objective since the beginning, according to the law of the sovereign fund of Djibouti, is to improve the governance of state-owned institutions but also to diversify the economy beyond the ports and the military bases, which are great and strong pillars for us as an economy. 

The idea is to turn Djibouti a bit like Singapore in terms of diversification. There is always, I think, no shame in being inspired and being realistic about it.

So, in terms of being realistic, the competitive advantage (Djibouti has) do allow us to become a tourism hub. We have fantastic natural beauty in terms of beaches, islands and lakes… you name it.

What are the other key targets for the sovereign fund?

Making Djibouti into a financial services hub is also one of them. We have a strong banking sector, we have a very stable currency and certainly compared to any other developing and emerging country in the world because of the pegged to the US dollar of the Djibouti franc — a bit like the Gulf currencies pegged to the US dollar since 1949. This stability is very important to build on it into a well-diversified and deep financial system.

The other is obviously turning the country into a digital economy hub. We have access to the subsea cable infrastructure with 10 of the global subsea cables going through Djibouti. We can certainly turn this place not only into a data center hub, but also build a digital economy, FinTech… etcetera.



Once again, things do not happen overnight. But those are among the things that we are focusing on and we continue to focus on, on top of renewable energy. We have already come a long way in terms of renewable energy. The first wind power project kicked off last year and it’s operating. We are now building solar projects and they will be operating by early next year. So, it’s a continuous progress at all levels.

I’ll add another dimension to the multi-dimensional role of the sovereign wealth fund of Djibouti is to boost the private sector. The private sector today remains relatively small compared to the rest of the economy, which is still dominated by the public sector. There’s no harm in that, again. We are a relatively young country and gained independence in 1977. That is not a long time in terms of modern history. 

The next stage is to unleash the potential of the private sector, like it is the case in many other countries, not just developed ones such as France, the UK and U.S. whose economies are dominated by the private sector and the SMEs, but also African countries, like Tunisia.

So, that’s where Djibouti also is heading. It’s a long -term, obviously, story. It’s a long-term path.

What’s the government and its Vision 2035 role in that?

We have Vision 2035, a new national development plan, driving everything we do, coming from the high level, from the country’s President, who is not only a very wise leader and manager of a country, but also a visionary. And you need a visionary and the vision, and you need the political will and political stability.

CEO Slim Feriani

I mean, stability is the buzzword for Djibouti at all levels, you know, political stability, price or inflation stability, currency stability, all of that. Besides this, there is a political will. If there is a will, there is a way. We are delighted with that, and this is why we are here… I am here personally also. For me, it’s an amazing, really, challenge to take on, to build, develop, and make a success story of a brand new sovereign wealth fund in Africa.

Once again, we need to take a step back and be proud as Africans that there are sovereign wealth funds being developed and we can do things that have been done elsewhere, and we need to do that.

Usually, sovereign wealth funds, since Singapore, the Gulf countries, or other places that have launched sovereign wealth funds a long time ago, have been a game changer for their respective economies. Likewise, that’s what we are aspiring now. It’s early days, we need to match expectations, and we will continue.

What are the deals you have concluded at the Djibouti Forum and their impact?

We have signed two Memorandum of Understandings (MOUs) which is very important. We will also continue to build on this Forum.

The first was with a data center called PAIX, a major player in Africa. They are in about seven African countries. It’s a Dutch company that’s expanding from Europe to Africa, and they have “Africa 50” as the major shareholder, which is also part of the African Development Bank Group.

The MOU is to build a data center, a sizable data center here. Once again, we can do it because we have 10 sub-sea cables and three more on the way in the next 24 months.

We have also just signed an MoU with a local insurance company called Tamini. We’ve done it on behalf of our crowdfunding company that we launched just last year. Named “EncluFin”, it is the first and the only crowdfunding company here in Djibouti.

Now, we are part of a very few countries in Africa that have crowdfunding services. It is part of our financial inclusion ambition. Yes, we have banks, but not everyone is bankable, so we need to broaden the access to finances and financing and capital to the whole population.

As a young institution, how does the Djibouti sovereign wealth fund adhere to the highest standards of governance such as the San Diego principles?

That is a very good question because when we set up this sovereign wealth fund from the very beginning, we had the second mover advantage. 

Usually, we talk about the first mover advantage as you want to be the first, the early mover advantage. The second mover advantage is also very useful when you set up a new vehicle like this sovereign wealth fund, because you want to see how it’s been done before and you avoid the teething issues and the learning issues and the learning curve and sometimes the mistakes.

So, we had that advantage where we have seen what has happened with another hundred or so sovereign wealth funds before. Today, there is no way you can do something really incredible if you don’t talk about the Environmental, Social and Governance (ESG).  The ESG issues drive everything we do. 

So in everything we do we usually bring on partners, data centers, banks, you name it, in any sector, renewable energy, new tenants and others coming as partners. This is because we are a strategic financial investor. We are not in the business of building a hotel and managing it, we’re building a data center and we need to bring experts. So, these are really global world class companies and operators and they already adhere to the ESG and all the social responsible investing aspects.



We also impose on ourselves to make sure that in anything we do, we have to take the environmental, social, and governance issues seriously. It all starts with governance. Once you get the governance right, then you can do environmentally friendly and socially responsible investments. But, again, we need to get the governance right. If you look at the mandate and the law of the sovereign wealth fund of Djibouti, when it was done a couple of years ago, (our objective is) improve the governance, and diversify the economy. These are kind of two of our major objectives. It’s multidimensional. 

I came from the UK, where I have a couple of decades of experience working under the Financial Services Authority, all the rules and regulations there. It’s all good governance in financial markets. So, I brought in the know-how that added value to Africa, to Djibouti, to the sovereign wealth fund of Djibouti, along with my other colleagues. We have brought in about 50 years of international standards and international best practices. We have also imposed among ourselves to follow the Santiago Principles and to be right up there. 

But, it is a collective work and you can’t do it all in one day.

Are there opportunities for partnership with neighboring countries?

The success of Djibouti is the success of the whole region, a success to all the brotherly and neighboring countries around. The success of Ethiopia, likewise, applies to all of us and the sum of the parts is much bigger than the sum of the individuals. So, we have a vested interest. All of us in Africa, the 1.4 billion people, have a vested interest in all working together.

The solidarity between Africans starts there because, of course, we need friends of Africa to help us also to develop. But, first of all it’s us. It’s along the lines of the African Union thinking, which is what our president thinks — we need Africa, by Africans, for Africa, and Africans. That is what we think. The benefit is also for the whole region. Whether it is for our brothers and neighbors in Ethiopia or in neighboring countries, when Djibouti continues to build on its success and continues to develop infrastructure and all of that will help propel regional and continental development.

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