DJIBOUTI MCC ROUNDUP: SUBSTANTIAL FY2008 PROGRESS

UNCLAS SECTION 01 OF 02 DJIBOUTI 000684 DEPARTMENT FOR AF/E AND AF/EPS LONDON, PARIS, ROME FOR AFRICA WATCHER CJTF-HOA FOR POLAD SIPDIS E.O. 12958: N/A TAGS: PGOV ECON PHUM SOCI SENV KCOR KMCA KWMN SUBJECT: DJIBOUTI MCC ROUNDUP: SUBSTANTIAL FY2008 PROGRESS DJIBOUTI 00000684 001.2 OF 002 ¶1. SUMMARY: In FY2008, Djibouti made significant strides in several areas measured by the Millennium Challenge Corporation (MCC) indicators. Some of Djibouti's achievements--such as holding free and fair legislative elections that brought two more women into parliament, organizing a national seminar on human rights, and actively promoting renewable energy development--may not be fully captured in this year's indicator data. Few of the independent third-party institutions MCC uses for indicator data have a robust, recent, or frequent in-country presence. Therefore, there may be a significant time lag before these institutions can accurately capture Djibouti's latest progress. This cable aims to provide a more comprehensive on-the-ground summary of Djibouti's improvement in several MCC indicator areas. END SUMMARY. -------------- RULING JUSTLY -------------- ¶2. POLITICAL RIGHTS; VOICE AND ACCOUNTABILITY --In February 2008, Djibouti held successful legislative elections. Although three opposition parties boycotted the race, the winning coalition, the "Union for a Presidential Majority," included five parties, including former opposition groups. Two more women were elected to the National Assembly, bringing the total number of female parliamentarians in the 65-seat body up to nine. International observers--including from the African Union and the Arab League--considered the election generally free and fair, and there was a reported voter turnout rate of over 72 percent. --As part of its ongoing project to decentralize governmental functions and empower local and regional leadership, the central GODJ finished transferring responsibility for civil documents such as birth certificates to the regional authorities in 2008. This transfer adds to the authority and credibility of the newly elected regional councils and the Mayor of Djibouti City. In June 2008, the GODJ collaborated with the United Nations Development Program (UNDP) and the European Union (EU) to hold a national workshop on decentralization and local development. ¶3. CIVIL LIBERTIES --In May 2008, the GODJ held a National Human Rights Workshop in cooperation with the United Nations High Commissioner for Human Rights (UNHCR). Government officials, local NGO representatives, the head of the National Police, local legal advocates, and the international community participated in the two-day program, which featured lively and open discussions on a variety of human rights issues. --In May 2008, Djibouti's First Lady and the United Nations Population Fund launched a five-year, $400,000 campaign against female genital mutilation (FGM). In continuation of the GODJ's active advocacy against FGM, the new campaign kicked off with a series of workshops throughout the spring and summer of 2008, including sessions targeting community religious leaders and legal experts. ¶4. CONTROL OF CORRUPTION --Two institutions--the Chamber of Accounts and Fiscal Discipline, and the State Inspectorate General--continued to monitor and audit government finances. In May 2008, representatives from both these bodies joined several dozen newly-elected parliamentarians, civil servants, and business community leaders in a week-long series of workshops on fighting corruption moderated by Africa Regional Services speaker Robert Smolik. -------------- INVESTING IN PEOPLE -------------- ¶5. INVESTING IN PEOPLE --During 2008, the GODJ created both a new agency and a new cabinet-level position to better coordinate its national poverty reduction program. In January 2008, the GODJ formally launched the Djiboutian Agency for Social Development (ADDS). ADDS is charged with administering the National Social Development Initiative (INDS),a $9 million -plus comprehensive poverty reduction strategy. The INDS aims to create jobs, provide improved social services and infrastructure, and target the most vulnerable groups for assistance. In March 2008, President Guelleh created the new position of Secretary of State in charge of National Solidarity, to be responsible for coordinating poverty reduction measures. In April 2008, the new Secretary of State launched the National Fund for Savings and Credit, designed to provide accessible finance DJIBOUTI 00000684 002.2 OF 002 options to previously underserved groups. ¶6. NATURAL RESOURCE MANAGEMENT --In 2008, the GODJ continued to actively pursue development of renewable energy alternatives, including wind, solar, and geothermal sources. In April 2008, the GODJ signed agreements with Iceland to begin cooperative development of Djibouti's considerable geothermal potential. By supplementing or replacing current diesel-generated power and unsustainably harvested wood fuel with cleaner alternatives, the GODJ seeks to improve air and water quality and substantially lower the cost of electricity. This will improve health conditions for Djibouti's population and its fragile ecosystems, as well as expand access to basic power and water. -------------- ECONOMIC FREEDOM -------------- ¶7. REGULATORY QUALITY; TRADE POLICY --In 2008, Djibouti continued to attract foreign investment with a liberal and transparent investment code. Dubai Ports World (DP World) professionally managed the Free Zone, port, airport, and customs service. In July 2008, the Al Noor Holding Group officially launched a project to build a bridge between Djibouti and Yemen and construct a new city on both sides of the bridge. The GODJ welcomed the estimated $200 billion project and conceded a parcel of land for the construction of the new city. The Al Noor Alliance includes several well-known U.S. companies, such as AIG, Honeywell, L3, PricewaterhouseCoopers, and SAIC. --Djibouti's open regulatory environment continued to spur growth in the financial services sector. In February 2008, President Guelleh officially opened Djibouti's fifth private bank, the Banque de Depot et de Credit de Djibouti. ¶8. BUSINESS START-UP --In February 2008, the Ministry of Commerce held a series of national meetings on trade and business. The meetings drew together public and private sector actors, and focused, among other topics, on how to improve Djibouti's evaluation in the annual "Doing Business" report. -------------- COME A LONG WAY, AND A LONG WAY TO GO -------------- ¶9. COMMENT: Djibouti still has many deficits to overcome, and much room to improve on MCC indicators. However, while grappling with unemployment rates of nearly 60 percent, persistent drought and resulting high malnutrition levels, overall regional security threats, and an ongoing border dispute with Eritrea, Djibouti has still managed to make important strides in several key indicator areas. Recognition of Djibouti's accomplishments--and especially of achievements not captured by third-party institutions without the ability to consistently gauge recent ground truth--will likely help spur redoubled GODJ efforts to improve governance, better the lot of ordinary Djiboutians, and keep cementing Djibouti's status as a regional oasis of economic freedom. END COMMENT. WONG