Djibouti is best known as the tiny country in the Horn of Africa that hosts eight military bases, including those of the US and China.

In the last decade and a half, it has also developed into a hub where undersea data cables land. As is the case for the military bases, strategic positioning and stability are important factors.

Small but stable

Ten undersea cables land here, connecting Asia, Europe and Africa. While neighbouring Eritrea and Somalia are also strategically located, Eritrea’s communications environment is highly regulated and relies on a satellite for digital communications. Somalia, on the other hand, has been embroiled in civil conflict for over a decade.

“The pillar of our strategy in Djibouti is stability,” Prime Minister Abdoulkader Kamil Mohamed told investors at the Djibouti Forum, convened by the Sovereign Wealth Fund of Djibouti early in April. “We have become a regional hub not only for shipping, but also for data. Our undersea cables carry the information that fuels global trade.” He added that Djibouti has been investing in digital infrastructure, and that it sees itself as a springboard to the continent.

Fast lane

Efforts are currently underway, in collaboration with Djibouti Telecom, to establish a low-latency link passing through Ethiopia to Nairobi, Kenya, by leveraging high-voltage electricity lines. According to Yonas Maru, managing director and co-founder of BCS Group — a telecom infrastructure provider that installs data cables — this initiative will improve internet speeds.

“The distance between Nairobi and Djibouti via Mombasa and the undersea cables is around 4,000km, while the distance between Nairobi and Djibouti via the high-voltage electricity lines, which we use to carry fibre services, is only 1,800 km. With a shorter distance for the light signals to travel, you get a corresponding improvement in internet speed,” Maru told the forum.

“The market is becoming more and more sensitive to internet speeds,” Maru told The Africa Report. This is especially true as the use of applications such as gaming, virtual reality and the metaverse continues to grow. “So, distance becomes important.”

BCS Group’s relationship with Djibouti Telecom began in 2012 when a submarine cable linking the United Arab Emirates to Mombasa was accidentally cut during dredging work at the Mombasa port.

“We signed the order forms with the supplier, and they gave us a lead time of two weeks,” Maru said. “I said, huh, two weeks? I’m from Ethiopia — I’ll get this done in two hours.”

Maru explained that he boarded a plane and arrived in Djibouti in the early morning hours. By 7:30 am, he was in front of Djibouti Telecom’s offices. Two hours later, “we were reconnected and the service was back up”, he said.

The reconnection was achieved by rerouting the link through other available cables. “Since then, Djibouti has been a very important place for our business.” Out of the 10 submarine cables that land in Djibouti, BCS Group has capacity on at least four. The new link to Nairobi via Mombasa will further add to this number.

Maru said that while the Djibouti market is small, the country serves as a crucial sea gateway to the large, landlocked Ethiopian market, among others. Five of the cables landing in Djibouti serve markets in East and Southern Africa, while the remaining five connect Europe and Asia.

Djibouti’s importance in this regard is relatively recent. Thirty cables in the Red Sea carry traffic between Europe and Asia, but they do not land in Djibouti.

“Some of the earlier cables, built in the 1990s and early 2000s for Europe-Asia traffic, do not stop in Djibouti. But I would guess that more than half of the cables built in the last 15 years or so do stop there,” Maru said.

He explained that the benefits of having these cables land in Djibouti are threefold. First, it increases the resilience of the cable and enhances its availability.

“If a cable is running from Europe to Asia through the Red Sea, and there’s a cut in the Red Sea north of Djibouti, the service will be completely down until that cut is fixed,” he said. “Typically, it takes at least a month — probably around two months, but potentially as long as three months — depending on the situation.”

However, if the cable lands in Djibouti, service can be restored more quickly because cross-connecting is simpler.

In addition, Djibouti’s cable positioning helps reduce the cost of high-speed internet. Repeating a signal on land is cheaper than doing so underwater. Furthermore, cables that land in Djibouti can also generate secondary business by connecting to African markets.

“Instead of building all the way to Europe, there are already Europe-Asia cables that land in Djibouti,” he said. “I can just build up to Djibouti and then cross-connect to those cables. It’s like connecting to another highway. So, the cables can pick up some additional business, even though that wasn’t the main business case for building the Europe-Asia cable network.”

The only downside to an increased number of cable landings is that it raises the risk of accidental cuts caused by a ship’s anchor.

Coining from cables

Djibouti benefits significantly from the revenue generated by these cable landings. The first source of income is a one-time fee for the initial landing. The second is a fee for the data centre where the cable installs its telecom equipment to transmit data.

“That setup consumes a lot of power because it requires air conditioning, security, and other infrastructure. Naturally, operators have to pay a rental fee for that,” Maru said. There are also additional charges for each cross-connect.

“For every cross-connect you want to make, you must do the interconnection inside the Djibouti Telecom data centre or the submarine landing station,” he said. While cross-connects were once quite expensive due to Djibouti Telecom’s monopoly, Maru says “prices have come down now”.

Djibouti Telecom CEO Mohamed Assoweh Bouh previously said the company has invested more than $200m in undersea cables over the past decade. This investment has enabled the operator to provide services to telecom providers in Ethiopia, Somalia and Kenya. In 2023, Djibouti Telecom earned approximately $82m from international operations, which was reinvested to enhance national connectivity.

The submarine cables transiting through Djibouti are monitored by satellite. Once they land, they are connected to four stations that are also monitored to ensure security and prevent breakdowns.

Prince Moukoumbouka, CEO of CEGELEM Group, a business consultancy, told the Djibouti Forum that the landing of subsea cables — combined with a favourable business environment, a youthful population, and a diaspora with “an appetite and competence for the digital” — positions Djibouti well to capitalise by building data centres and offering digital services.

“We need to make Djibouti the future Silicon Valley,” he said.