Djibouti's sovereign wealth fund aims to double assets in a decade, CEO says
NAIROBI, March 28 (Reuters) - Djibouti's sovereign wealth fund plans to double its assets under management of more than $1 billion in the next decade, its chief executive said, investing in high-return projects to support the government's economic development plans.
The Horn of Africa country established the Fonds Souverain de Djibouti (FSD) in 2020, looking to tap a model that has successfully been deployed by Gulf and Asian economies like Qatar and Singapore, to bankroll economic diversification and development, while offering a cushion during crises.
"All else being the same, the base of dividends etcetera, I think we can double the size of the assets under management within the next decade certainly," Slim Feriani, the chief executive officer of FSD, told Reuters in an interview.
The wealth fund fully owns the state telecommunications monopoly Djibouti Telecom, and a 40% stake in GHIH, which is the holding company for many of Djibouti's maritime and logistical assets including its port, Feriani said.
It also gets about $25 million in cash every year, representing a 20% share from the annual revenue from leases of bases by the government to foreign militaries.
Djibouti's location makes it a strategically important country, hosting military bases for the United States, China, Japan and European nations like Italy and France, Feriani said.
Djibouti, at the southern entrance to the Red Sea, is one of the smallest countries in Africa with a population of just over 1 million people.
Its economy is heavily dependent on global maritime transport and its state-of-the-art key deep water port, which also serves the neighbouring, landlocked Ethiopia, a fast-growing market of more than 100 million people.
The World Bank forecasts economic growth to average 5.4% from 2024-2026, supported by export earnings from logistics and re-exports to Ethiopia.
"We are a hub for ports and logistics, but we should be a hub for manufacturing industry for the rest of the region," said Feriani.
FSD has an investment pipeline worth more than $50 million, encompassing data centres, renewable energy and logistics in the country, as well as a stake in a solar energy project in the Grand Bara area, said Feriani who previously held positions at investment bank Nomura in London and as a minister in Tunisia.
However, the fund would eventually also invest in assets outside the country, said Feriani, without giving a time frame.
"Our inspiration is Temasek," he said, referring to Singapore's sovereign wealth fund.
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