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Djibouti Signs Trade, Banking Deals to Deepen Ties with China

Djibouti's president has signed agreements with China to set up a trade zone and establish a legal framework to let Chinese banks operate in the tiny Horn of Africa nation, the latest move to deepen ties with Beijing.

China said last year that its military was in talks to build logistics facilities in Djibouti, a country of 876,000 people which wants to build up its role as an international port and already hosts U.S. and French military bases.

The free zone for trade and business would cover an area of 48 sq km (19 sq miles). In a statement, President Ismail Omar Guelleh said he wanted the first phase, covering 1.5 sq km, to be operational before the end of 2016.

Another agreement aims to expand Djibouti's role for transhipment of goods in trade between China and the world, the statement said. This would mean cargo coming to Djibouti — which is on a body of water linking the Red Sea with the Gulf of Aden — and then being reloaded for other destinations.

It also said the president had signed an agreement for "the implementation of a legal framework" for Chinese banks to operate in Djibouti. It gave few further details about the role those banks would play or when such banks would operate.

The statement did not say who signed the deal on behalf of China.

WFP base

Separately, the World Food Program on Wednesday also announced the opening of a new Horn of Africa logistics base in Djibouti, which borders Eritrea, Ethiopia and the breakaway Somali region of Somaliland.

"We are opening this facility at a critical time, when Djibouti is playing a key role in our responses to several major crises in the region, including the conflicts in South Sudan and Yemen and the drought in Ethiopia worsened by El Nino," said Valerie Guarnieri, WFP's Regional Director for East and Central Africa.

WFP said about a quarter of the people that it assists worldwide live in countries that will be supported by the Djibouti hub.