1. (U) Summary: President Guelleh
inaugurated October 11 Djibouti's first
social housing complex designed to greatly
improve the housing situation in Djibouti.
The 842 residences, consisting of apartments
and villas cost USD 24 million and was co-
financed by the Arab Fund for Economic and
Social Development (AFESD) and the Abu Dhabi
Fund for Development (ADFD). The residences
will be leased on a rent-to-own basis or can
be directly purchased. The development is
equipped with a modern waste drainage system
and will be supported by schools and a
mosque. Guelleh described the project as his
government's way to facilitate housing
ownership for citizens in order to avoid a
growing disparity in housing between poor
and rich. Hodane City is to be followed by
Hodane City II, with 1,000 residences,
financed by both AFESD and ADFD for a total
of USD 28 million. End Summary.



2. (U) Ambassador, along with her colleagues
in the diplomatic corps, and members of
international organizations in Djibouti,
participated in inaugural events October 11
for Djibouti's new social housing complex
called Hodane City. Initiated by the
Government of Djibouti in 1999, Hodane City
comprises 842 habitations built by a Dubai-
based company and funded by Arab development
agencies.



3. (U) The project of Hodane City was
originally planned for the construction of
2,000 low-income residences. A large parcel
of land was later prepared for construction
with assistance from France and the World
Bank, within the framework of urban
development of Djibouti, which made
available 3,600 plots of land. Hodane City
is built on that same spot, located at
Balbala, on the outskirts of Djibouti City.
The site stands on high ground, close to
National Road no. 1. It offers a good view
of the Gulf of Tadjourah and the Port of
Doraleh but most importantly, waste and
rainwater can be easily drained out. Hodane
City includes 842 low-income residences, a
large Mosque, a school, a clinic and a
market. Two and three bedroom units are
available in villas or duplexes, and four
bedrooms in apartment buildings. Space is
available in villas and duplexes to
accommodate one or two extra rooms if
necessary. These houses are leased on a
rent-to-own basis or can be directly
purchased. It is important to note that
Hodane City is equipped with Bio Pak, a
modern wastewater drainage system. This
environment-friendly drainage system is
unique in Djibouti.



4. (U) The Arab Fund for Economic and Social
Development (AFESD) co-financed the project
with the Abu Dhabi Fund for Development
(ADFD) for a total amount of US$ 24.45
Million. The GOD obtained this loan at a 3%
rate for twenty years with a grace period of
five years. Dubai based Lootah Building &
Construction won the tender and was awarded
the construction work engineered by the
Kuwaiti Pan Arab Consulting Engineers. This
major project, a first in Djibouti, had a
positive impact on the economy of the
country. This project revived the
construction sector, which was experiencing
serious difficulties, by creating hundreds
of jobs. Lootah Building & Construction and
the locally subcontracted companies (more
than 40) completed the project in 32 months
as planned. It is important to note that
the work master is the "Societe Immobiliere
de Djibouti (SID)," a government real estate
agency that oversaw the project, and will
manage Hodane City. SID has managed the
creation of several other housing complexes
including Arhiba City (832 houses), Einguela
City (804 habitations), Wadajir City (106
houses) and Luxembourg City (92 lodgings).



5. (U) In his speech inaugurating Hodane
City, President Guelleh said the project is
a reality today but it is the product of
hard work, patience and perseverance on the
part of those who participated in the
construction of this "beautiful work of
art." He explained that the government was
not trying to compete with private
initiatives but simply facilitating house
ownership for citizens in order to avoid a
growing disparity in housing between the
poor and the rich. President Guelleh
stressed that the government will make sure
that the same opportunities are offered to
fellow citizens in other regions of
Djibouti. President Guelleh stated a house
is not a luxury but a right the government
should guarantee to all citizens, no matter
their conditions. Finally, he took the
opportunity to comment on the
decentralization process recently initiated
by the government and added that social
housing for district inhabitants is an
important part of his decentralization plan.



6. (U) In an interview, the Minister of
Housing expressed his appreciation for
Hodane City but at the same time deplored
the existing difficulties in the housing
sector in Djibouti. He said that 2,500
additional houses are necessary to lodge the
3% population growth every year. He added
that in spite of the reduction of
construction material custom duties, the
cost of building remains high because most
of the material is imported and labor cost
is high. Also, high interest and strong
guarantees imposed by the banks make it very
difficult for average Djiboutians to obtain
loans. According to the Ministry of Housing,
urbanism, only 34% of houses are made of
permanent material, 50% of households own
the house they occupy, and rent represents
40% of a household's expenses.



7. (U) Hodane City is soon to be followed by
Hodane City II, with 1000 residences,
located at the same site. Hodane II, which
is in preparation phase, is also being
financed by AFESD and ADFD for a total
amount of US$ 28 Million.