A Djibouti state-owned company has secured US$155mn in financing from a group of lenders to advance oil infrastructure projects, as the East African nation works to solidify its position as a regional transshipment hub for trade.

The African Export-Import Bank (Afreximbank) is providing a US$120mn facility to Great Horn Investment Holding (GHIH), an investment entity owned by the Djibouti government, for upgrades to the Damerjog Industrial Development Free Trade Zone.

Proceeds will be used for the completion of an oil jetty, providing ships access to the free trade zone, and the construction of a 150,000m³ oil tank farm. Moroccan firm, SOMAGEC, has been selected to develop the projects.

An additional US$35mn is being provided by local lender Banque pour le Commerce et l’Industrie Mer Rouge.

The deal will bolster Djibouti government plans to make the East African nation a regional transshipment and logistics hub for global trade, Afreximbank says in a statement.

Djibouti, a country with a population of just over 1 million and limited natural resources, aims to capitalise on its position straddling the Bab‑el‑Mandeb strait, where it is estimated 30% of commercial shipping passes enroute to the Suez Canal and Red Sea.

The agreement will “also promote intra-African trade, given that Djibouti’s economy is largely based on the provision of marine services to neighbouring nations Ethiopia and Somalia, by offering them a gateway for ocean-borne freight”, Afreximbank says.

Djibouti is a key trade link for Ethiopia, one of Africa’s most populous nations and largest economies. Last week, the International Development Association (IDA) pledged a US$730mn grant to upgrade the Addis-Djibouti corridor, amid concerns over road quality and insufficient capacity to accommodate the growing truck traffic. Over 95% of Ethiopia’s import-export trade, by volume, uses the Addis-Djibouti corridor.

GHIH chairman, Aboubaker Hadi Omar, says the move will enhance the “efficient movement” of petroleum products, while developing a “core economic belt with Ethiopia and ultimately an industrial base for East and Central Africa”.