US embassy cable - 05DJIBOUTI1006

UNCLAS SECTION 01 OF 02 DJIBOUTI 001006 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON, EAID, ETRD, EFIN, DJ, PGOG 
SUBJECT: INAUGURATION OF HODANE CITY, AN 842 
SOCIAL HOUSES COMPOUND IN DJIBOUTI 
 
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.