Trade

Saudi Arabia to set up logistics centre in Djibouti

June 6, 2024, 3:50 AM

The Port of Djibouti's position on the Red Sea makes the country important for Saudi exports to Africa

120,000 sq m site planned
Strategic Red Sea location
Incentives to Saudi companies

A delegation of 100 Saudi investors visited Djibouti this week to sign a contract for a logistics centre in the country’s free zone, the latest development in Saudi Arabia’s efforts to extend trade ties with Africa.

Saudi Logistics City will cover 120,000 sq m in the first phase on a 92-year lease, and will include warehouses, business facilities and an exhibition of Saudi industries, the official Saudi Press Agency said.

Saudi Arabia wants to use the zone as a centre for exports throughout Africa as Djibouti is strategically placed on the Red Sea. It is also home to a Saudi military base, in addition to hosting forces from the US, France, Italy, Germany, Spain, China and Japan.

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Djibouti will offer Saudi companies incentives to invest in the renewable energy, tourism, agriculture and technology sectors, the Saudi Press Agency said.

Saudi Arabia’s national logistics plan, launched last year, envisions 17 out of 59 centres around the country being located in the vast eastern region, against only 12 in the capital, Riyadh.

Dubai logistics company DP World last month started work on a SAR900 million ($250 million) logistics park in Jeddah Islamic Port, and a centre is planned for Dammam port in the Eastern Province.

Saudi Arabia aims to increase port capacity to more than 40 million standard containers and its share of the regional trans-shipment market to 45 percent.

Africa is still new territory for Saudi logistics plans, but Dubai’s DP World already runs eight ports in African countries and Abu Dhabi’s AD Ports has a role in 11 ports. DP World has been in dispute with Djibouti over its Doraleh port since 2018.

“Saudi Arabia is taking more seriously its immediate maritime environment, especially with the growth of its own port capacity and expansion plans,” said US-based defence analyst Ted Karasik.