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Banking
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Legal Framework

Reference texts of the sector are: Law n°91/AN/05 related to the Central Bank of Djibouti and Law n°92/ AN/05 governing the opening, activities, and functioning of credit institutions.

In order to establish and engage in an activity in this sector, commercial banks must obtain prior agreement. It is possible to possess up to 30% of the shares of a credit institution or engage in refinancing in currencies from an international bank subject to the national standards and norms established by the Central Bank. The minimum capital amount for financial and banking institutions, or minimum endowment in capital for branch and agency establishments which are headquartered abroad, is fixed at one billion francs.

All economic actors, whether residing in Djibouti or not, are entitled to open an account. The possibility to make transfers everywhere in the world thanks to an adequate regulation constitutes one of the advantages of Djibouti.

Market Potential

Contributing to around 10% of the GDP, Djibouti’s banking sector plays a vital role in the national economy. Thanks to an exchange policy which maintains the franc at fixed parity with the U.S. Dollar, Djibouti’s banking sector offers a stable, dynamic, and reassuring financial environment for regional investors. Owing to a strict application of international regulatory provisions and prudent standards, Djibouti’s financial sector provides reliable and sound banking system, backed by major banking groups, and benefitting from free capital flows. The importance of the banking sector can also be attributed to the absence of exchange restrictions and to the stability of the Djiboutian Franc, the national currency. In fact, Djiboutian banks have attracted substantial foreign deposits in Djibouti.

Furthermore the population banking rate has significantly increased from 5% to 12% in a matter of a few years. The domestic market is promising and the presence of several banks will undoubtedly contribute to the facilitation of loans to the private sector and the proliferation of services.

In a context marked by the good performance of the national economy, the acceleration of money supply has continued in 2016. This development is mainly due to the growth of total credit granted to the public and the private sector.

 

Besides the Central Bank of Djibouti, the country’s financial sector includes 12 deposit and credit institutions.

 

New banks have also been included in the list approved by the Central Bank. Djibouti disposes of a stable financial sector with a market that goes beyond borders. However, the country still lacks specialised banking service providers that respond to the increasing demand of the local population and businesses. Authorities encourage the private sector to invest in the following:

  • Establishment of more facilities and customer oriented banks
  • Establishment of investment banks that provide funds to priority sectors namely in agriculture and industry
  • Private and local partnerships to develop the microcredit and microfinance sector
  • Mutual fund agencies
  • Portfolio management agencies