Djibouti Signs $1bn Deal to Build Rocket Launching Site with China

Current political developments and calculations in the Horn of Africa paint a picture of a complex challenge brewing between China and the United States. China’s signing of deal worth $1bn with Djibouti to build a rocket launching station and America’s plan to conduct a military drill involving multinational military training exercise dubbed as “Justified Accord” are the manifestations of such rivalry in the region

Djibouti has signed a preliminary agreement with Chinese multinational Hong Kong Aero Tech to build a $1bn rocket launch site which could see the launch of the first Africa-made satellite from African soil.

Djibouti’s President Ismail Omar Guelleh has signed a technological cooperation agreement with the Chinese company Hong Kong Aerospace Technology to build a $1bn satellite and rocket launch site.

The project will include the construction of port infrastructure and highways in the northern Obock region to ensure the reliable routing of aerospace materials coming from China.

President Guelleh said construction works could be completed as early as 2027 and infrastructure will be handed over to Djibouti upon the completion of a 30-year co-management contract with Hong Kong Aerospace Technology.

“I am delighted to see our country involved in this promising technological and energy development project,” said Guelleh.

A delegation from Hong Kong Aerospace Technology, which includes the company’s vice president Allen Fung, arrived in Djibouti on 4 January to discuss business cooperation with the government.

Hong Kong Aerospace Technology Group says it is Hong Kong’s first commercial aerospace enterprise focusing on satellite network engineering and precise satellite manufacturing.

The firm owns five technical centers and manufacturing bases, including a satellite manufacturing center and a center for satellite data.

The delegation was welcomed by the Chinese ambassador to Djibouti Hu Bin, who said he “encourages the enterprise to strengthen feasible research, establish a firm awareness of compliance, balance corporate interests and social responsibilities, promote the diversified economic development of Djibouti, and contribute to Sino-Djibouti cooperation.”

Djibouti, one of Africa’s smallest countries with only 1m inhabitants, is relatively close to the equator, making it an attractive destination for the launch of satellites which can take advantage of the Earth’s rotational speed, ensuring savings on the amount of fuel required to get rockets into space.

Although African countries have previously shown an interest in the design and construction of satellites – Kenya, which benefits from a similar geographical advantage as Djibouti, has discussed projects – “none of the 54 satellites launched by African countries were launched from Africa,” says Temidayo Oniosun, managing director at the consultancy Space In Africa.

“Hopefully, this move will enable the launch of the first Africa-made satellite from African soil. This project, if successful, will also positively affect the industry across several countries and segments, lead to the establishment of new enterprises and new spinoffs, and would ultimately play a vital role in implementing a continentally driven space program” he says.

In the 2022 edition of the African Space Industry Report released last August, Oniosun says that the African space economy in 2021 was worth $19.49bn, with the majority of revenues coming from Fixed Satellite Services (FSS), Mobile Satellite Services (MSS), and Satellite TV services.

The report projects the industry to grow by 16.16% to $22.64bn by 2026. However, there is currently a limited amount of satellite component manufacturing on the continent, according to the report. The Djibouti project could help to spur demand for African-made components.

“Djibouti’s first rocket launch site would provide the needed support and boost for the satellite component manufacturing segment of the African space industry,” says Oniosun.

“The companies operating in this segment are primarily domiciled in South Africa, and it has been difficult for them to sell to other African countries. However, the proximity of a launch site and potentially a satellite manufacturing facility could open a new chain of business opportunities for them which could help them scale,” he says.

In 2022, African nations allocated a total of $534.9m for the operation of their respective space programs, and 15 African nations have manufactured a total of 54 satellites.