Inside Africa: Djibouti’s Quiet Bet on Becoming the Red Sea’s Cloud and Cable Capital
Holger Leue
Djibouti is usually cast as a speck on the map of the Red Sea, a rentier state trading in military basing rights and port access at the mouth of the Bab al‑Mandeb. Yet over the past decade, this country of barely one million people has been quietly building a second identity: as a switching yard for the world’s data, anchoring East Africa’s emerging cloud and connectivity economy. As submarine cables multiply along the Red Sea and Gulf of Aden, Djibouti is betting that it can turn geography into a durable digital business model.
Djibouti’s digital strategy starts offshore. More than a dozen subsea cables land in or pass immediately off its coast, tying Europe, the Gulf, South Asia, and East Africa into a narrow corridor of glass fibers that converge at the Bab al‑Mandeb. The country is already a landing point for a dense cluster of systems, including Asia‑Africa‑Europe‑1, Eastern Africa Submarine System, Djibouti Africa Regional Express 1, Europe‑India Gateway, South‑East Asia-Middle East-Western Europe‑3 (SeaMeWe‑3), and the 2Africa cable, which reached Djibouti in 2022. Sea‑Me‑We‑6 and new Europe-Asia routes are also planned to add capacity and redundancy on this axis, reinforcing the role of Djibouti as a regional hub where traffic is aggregated and redistributed rather than merely passed through.
Those cables come ashore in a set of purpose‑built landing stations that Djibouti Telecom, the state‑owned incumbent, has expanded over the past decade. The operator has invested on the order of hundreds of millions of dollars in submarine systems and terrestrial links, building multiple energy‑backed landing facilities designed to run continuously with on‑site power generation. Industry analysts now describe Djibouti as a “stable point” for regional carriers because it can route traffic across several independent systems if a fault or cut occurs on one of the main Red Sea routes. In a region where anchor drags, earthquakes, and, more recently, attacks linked to the conflict in Yemen have repeatedly damaged cables, that diversification has become a selling point in wholesale bandwidth contracts.
Onshore, Djibouti has tried to ensure that this connectivity does more than transit the country. The Djibouti Data Center (DDC), opened in 2013 as the first carrier‑neutral Tier III‑standard colocation facility in the Horn of Africa, was structured as a joint venture between Djibouti Telecom and a group of local and foreign investors. The data center hosts the Djibouti Internet Exchange, which allows global carriers, content providers, and regional ISPs to interconnect and exchange traffic directly where the cables land. In a market historically dominated by a single state‑owned operator, the presence of a neutral meet‑me point is significant, offering foreign networks a way into East African demand without relying solely on bilateral deals.
The state has re‑entered the data‑center space through different instruments. In 2024, PAIX Data Centres, a pan‑African colocation provider, announced a joint venture with the Djibouti Sovereign Fund to develop a 5MW, roughly 50,000‑square‑foot facility in Djibouti City, known as JIB1 and expected to come online in 2026. Under this structure, PAIX acquires land, buildings, and technical equipment, while the sovereign fund leverages its holdings in Electricité de Djibouti and Djibouti Telecom to underpin the project’s power and connectivity. The fund’s chief investment officer has presented the project as a tool for “digital inclusion and economic development,” framing it as a national platform to support regional banks, cloud‑based businesses, and public administration rather than a purely export‑oriented enclave.
Sovereign Fund to develop a 5MW, roughly 50,000‑square‑foot facility in Djibouti City, known as JIB1, and expected to come online in 2026. Under this structure, PAIX acquires land, buildings, and technical equipment, while the sovereign fund leverages its holdings in Electricité de Djibouti and Djibouti Telecom to underpin the project’s power and connectivity. The fund’s chief investment officer has presented the project as a tool for “digital inclusion and economic development,” framing it as a national platform to support regional banks, cloud‑based businesses, and public administration rather than a purely export‑oriented enclave.
Alongside PAIX, private operators such as Wingu Africa have expanded their footprint. Wingu, which already operates in Ethiopia and Kenya, runs data‑center facilities in Djibouti and markets the country as “Africa’s digital gateway,” highlighting its position where Europe-Africa-Asia cables converge and where low‑latency paths to Gulf and Indian networks are available. Large international carriers, including China Telecom and Orange Business Services, have established points of presence in Djibouti’s facilities, adding to the ecosystem of networks and clouds that can peer locally. The underlying economic logic is that as more networks and content nodes cluster in a single neutral site, interconnection costs fall and the incentive to host data “at the edge” of the Red Sea increases.
Djibouti’s ambitions extend beyond serving as a coastal junction. Landlocked Ethiopia, with a population exceeding 120 million, depends on external gateways to connect to the global internet and cloud providers, and Djibouti has become one of its primary outlets. Multiple high‑capacity terrestrial fiber routes now link Ethiopian cities to Djibouti City, giving Ethio Telecom and private Ethiopian operators redundancy and shorter paths to European and Asian networks. In February 2026, Ethio Telecom, Djibouti Telecom, and the Sudatel Group signed a tripartite agreement to create a new terrestrial fiber corridor tying Djibouti’s submarine landing stations through Ethiopia to Sudan, effectively forming an east‑west backbone between the Red Sea gateways of Djibouti and Port Sudan.
Cables like DARE1, which connect Djibouti to Somalia and Kenya and are being extended further south to Tanzania, Mozambique, Madagascar, and South Africa, play a similar role in integrating coastal and inland markets. For landlocked economies, these corridors can lower latency and wholesale bandwidth costs by offering more than one route to major cloud regions, a factor with growing importance as data consumption and AI‑related workloads increase in East Africa. For Djibouti, each additional inland link reinforces the country’s position as an indispensable node, ensuring that even as new subsea systems land elsewhere along the African coast, regional traffic still has a reason to converge on Djibouti’s exchanges and data centers.
The Red Sea’s recent cable cuts, which have been linked both to accidents and to conflict‑related activity, have heightened awareness of physical risk in this corridor. Djibouti’s strategy has been to build physical redundancy through more cables, more landing stations, and more terrestrial backhaul. At the same time, it has pursued institutional diversification by encouraging carrier‑neutral facilities and cross‑border partnerships that spread risk and align incentives beyond a single operator. That approach has attracted carriers looking for stable interconnection points, but it also leaves Djibouti embedded in consortia where decision‑making power over routes and investments often lies with global content players and foreign telecoms.
Questions about digital sovereignty are therefore central. Many of the subsea systems terminating in Djibouti are financed and operated by non‑African groups, including technology companies and Gulf or Asian telecoms, which can influence pricing, traffic engineering, and security policies. Djibouti has responded by seeking equity positions where possible, through Djibouti Telecom’s stakes, terrestrial infrastructure ownership, and the sovereign fund’s investments in data centers and utilities, without closing the door to external capital that underwrites large projects. The balance between open interconnection and national control is still evolving, and the choices made will shape how benefits from this infrastructure are distributed between local and foreign actors.
Djibouti’s next challenge is moving up the digital value chain. Its strengths in connectivity and colocation anchor the region’s networks, but high energy costs and limited generation capacity still constrain growth in power‑intensive fields such as large‑scale cloud computing or AI training. By linking Electricité de Djibouti to sovereign‑fund‑backed projects, the government hopes to coordinate power planning and attract data‑driven industries that increasingly demand reliable, low‑carbon energy. Meanwhile, carrier‑neutral operators like Wingu and PAIX are layering services on top of the infrastructure, offering regional content caching, cloud hosting, and disaster‑recovery solutions that keep data closer to East African users. Development partners, including the World Bank, now view Djibouti’s digital assets as a platform for regional e‑commerce, financial services, and government systems. Whether these benefits extend beyond corporate clients to lower consumer costs and broaden digital access will test how inclusive the country’s transformation actually is.
For now, Djibouti’s digital experiment remains less visible than its container terminals or foreign military bases. But as more of East Africa’s traffic flows through its landing stations and meet‑me rooms, the country’s role in shaping the region’s connectivity, resilience, and data governance is likely to grow. In that sense, the quiet bet on becoming the Red Sea’s cloud and cable capital is not only a story about infrastructure and investment; it is also about how a small state at a strategic chokepoint negotiates its place in the political economy of the global internet.
