FSD/KASADA: INVESTMENTS IN THE TOURISM SECTOR
FSD and Kasada Capital Management sign a Memorandum of Understanding to invest in the tourism sector in Djibouti.
On March 2nd, 2023, the Fonds Souverain de Djibouti “FSD”, represented by its CEO Dr. Slim Feriani, and Kasada Capital Management, represented by its managing partners, Mr. Olivier Granet and Mr. David Damiba, signed a Memorandum of Understanding (MOU). Mr. Granet was previously CEO of the Accor Group for the Africa and Middle East region. Mr. Damiba has 25 years of experience in finance and fund management.
The signing of the MOU is the culmination of several months of work that began with Kasada’s first visit to Djibouti at the end of May 2022, following an invitation by the young FSD (operational for two years). Based in South Africa, Kasada is an investment company dedicated to the hospitality industry in sub-Saharan Africa.
Kasada’s investment strategy covers several segments of the hospitality industry, from mid-range to luxury, and targets both hotel projects to be built (“greenfield”) and the acquisition of existing hotels (“brownfield”). Among the many Accor brands that Kasada markets in Africa are Pullman, Ibis, Novotel, Mercure, and Mövenpick.
Over the past four years (including the difficult years of Covid), the Kasada team has built a portfolio of hotel assets that bring together 3,211 rooms served by over 2,000 employees in 19 hotels located in 8 African countries across the continent, for investments of approximately $500 million (in equity and debt). Kasada’s expansion strategy focuses on key cities in sub-Saharan Africa.
An entry by Kasada into the Djiboutian hotel market would strengthen its footprint in this region of the Horn of Africa, which offers strong growth opportunities. Indeed, the share of tourism in Djibouti’s GDP is about 3%, which is far from the average of 8% observed on the African continent before the pandemic, going up to 40% of GDP for countries like Seychelles.
This MOU formalizes the co-investment and partnership project bringing together Kasada’s capital (in the form of FDI/Foreign Direct Investment) and FSD’s to build and renovate hotel infrastructure throughout the country. These investments will create economic growth as well as a large number of jobs, in addition to the indirect impact on sectors such as crafts.
This program complements ongoing projects led by other developers who share the vision of a country that develops a tourism range that can attract a Djiboutian clientele as well as customers from the East African, Middle Eastern, and worldwide regions. This is a “win-win” partnership that allows Kasada to add Djibouti to its range of hotel products offered to its broad pan-African clientele, from which Djibouti now benefits.
The FSD, under the supervision of the Presidency of the Republic, has the role of attracting leading international companies like Kasada and therefore FDI/Foreign Direct Investment in strategic sectors for the diversification of Djibouti’s economy. After attracting them, the role of the FSD is to co-invest with them in the framework of joint ventures or economic alliances, to reassure them by having aligned interests with them and by creating “success stories” of PPP (Public-Private Partnership) and having a multiplier effect of its financial resources (by attracting FDI).
This is Kasada’s first partnership with an African sovereign fund. It will become a symbol of sovereign capital (FSD) used to complement foreign direct investment (FDI)/private capital (Kasada) with pan-African sectoral expertise. It will be a pioneering and reassuring example of PPP in Africa.
Tourism, as a sector, is at the heart of the Vision 2035 led by His Excellency the President of the Republic, Mr. Ismail Omar Guelleh, working to improve the employability of Djiboutians through the promotion of Djibouti’s unique cultural and natural heritage. The objectives of Vision 2035 include, among others, the creation of more than 200,000 jobs and the attraction of 500,000 tourists.
The tourism sector is the largest employer in the world with around 10% of the global workforce, and is also one of the main economic drivers for several countries.