Country Overview
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The Republic of Djibouti, a coastal country located in the Horn of Africa enjoys a privileged geographical position between Africa, Asia and Europe. Since its independence, the country has political stability and social peace.

 

For a decade the country has a positive and sustained growth with a GDP of 6.3% in 2016. This dynamic should be maintained in the coming years, thanks to the continuation of a major program of investment, particularly in infrastructures. The objective of this investment is to turn the country into a regional platform of commercial services, logistics and financial. This extensive infrastructure program is also the result of increasing ports activities.

This growth is mainly due to the foreign direct investment and public investment.

Evolution of investment rate (% of GDP)

2001 2005 2006 2007 2008 2009
Investment rate (in % of GDP) 8 23 30.1 40s 49 41.5
Source : IMF, Djibouti Central Bank

The inflation rate in 2009 has been 2, 2% of the GDP comparing to the year 2008 which was marked by a sharp increase of food and oil prices, the inflation rate was very high and reaches 9,2% of the GDP in that year. This following chart shows the evolution of inflation rate since 2000 to 2009:

 

 

Source : IMF, Djibouti Central Bank



1. EVOLUTION OF ACTIVITY SECTORS IN THE DJIBOUTIAN ECONOMY

a. The evolution of primary and secondary sector:

The primary and secondary sectors are not well developed and represented only 4.5% and 15% of the national GDP in 2009. The primary sector including the agriculture, the silviculture and the fishing has nevertheless registered a progression of 7.4% in 2009 comparing to the year before. The Djiboutian authorities support and promote actively all investment projects related to this sector.

The agriculture is representing only 3% of the primary sector’ GDP and the agricultural production in Djibouti is mainly family and livelihood. In fact, the annual production does not exceed 6000 tons and covers only 10% of national needs.

The lack of knowledge about irrigation techniques, the weakness of producers organization, the lack of adequate storage infrastructures or sometimes water resources shortage are among the problems that hamper the development of the agriculture in Djibouti.
In order to improve the country’s food security the Djiboutian authorities have developed a strategy of acquiring agricultural land in neighbouring countries (Ethiopia, Sudan and Malawi). All related projects to agriculture are very welcomed and highly supported by the government.

This following chart shows the evolution of the number of arable farm and production in tons:


Source : IMF, Djibouti Central Bank



Livestock is the main activity in rural areas and is an important factor for developing the national economy given the high demand for meat and dairy products.
Moreover, in recent years with the construction of the Regional Centre for livestock Export, the Republic of Djibouti plays a transit centre for regional trade of animals with cattle exports to Egypt in particular and the countries of Middle East.

The development of this sector is hampered by the ignorance of the genetic potential of livestock, the lack of knowledge related to animal diseases, the poor organization of producers and the inadequate infrastructure and marketing channels.
All investment projects linked to this sector are very welcomed and highly supported by the government.

This following chart shows the evolution of the cattle exports in red and slaughtered animal since 2000.


Source : IMF, Djibouti Central Bank



Fishing, despite considerable development potential, contributes negligibly to the development of primary industry. In fact, with a coastline of 372 km and fish resources estimated at approximately 50,000 tons per year, the current national production amounts to only 1000 tons of fish and seafood per year, because of insufficient material mainly (storage, processing and distribution network).

To support and ensure the development of this sector, the Djiboutian government has undertaken the rehabilitation and modernisation of production facilities. Moreover, in order to increase exports the government intends to improve and set up international standard for marine products and establish a system of co-management between government administration and fishermen communities.

The secondary sector represents 15% of the national GDP and registered in 2009 an increased of 6.6% over the previous year. Indeed, this sector has benefited from the impact of major construction work in the field of port infrastructure and housing for individuals. As an illustration in 2009, 140 new construction enterprises were established in Djibouti.

The industry is one of the sectors identified as priorities and the Djibouti government encourages and fully supports the projects connected with setting up production facilities and processing. This sector offers many opportunities in the agro food, water, juice…processing, building materials…etc.

b. Evolution of the tertiary sector

The Djiboutian economy is highly dependent on the tertiary sector, which represents 80.7% of the GDP. This sector has benefited from investments realized in the port infrastructures, banking services and the upturn in the tourism sector. In fact, the existence of a port with modern facilities, an international airport and efficient telecommunication network contribute to the development of banking, commercial, insurance and services related to transport.

The port activities, which mainly include the transit to Somalia and Ethiopia, have evolved favourably. In 2009, the traffic of Djibouti Port has maintained its growth with a progress of 20, 9% in 2009 (9.330.489 tons in 2008 to 11.281.191 in 2009) comparing to 2008.


Source : Djibouti International Autonomous Port



Thanks to its strategic position and its political stability, the Republic of Djibouti has attracted in recent years massive foreign investment mainly from Arab countries. These investments are mostly concentrated around the development of a new deepwater port platform, construction of hotel infrastructure and real estate, as well as road links modernisation.

As regards banking, the arrival of new credit institutions on the market in 2009 has significantly improved services and bank loans. Credits given by the banks in 2009 to private sector have registered a growth of 8% in 2009 comparing to the year before.