Market Analysis

Creating Markets in Djibouti

October 12, 2023


The Djibouti Private Sector Diagnostic examines how Djibouti can transform its economy, create quality jobs and accelerate economic recovery by implementing economy-wide and sector-specific reforms and unlocking private investment in key sectors, including transport, logistics, energy, telecoms, finance, tourism and fisheries.

In the fragile Horn of Africa, Djibouti has been an oasis of stability that successfully managed to leverage its geo-strategic location to turn its resource-constrained small economy into a fast-growing regional hub. However, the country's public investment-led-growth model faces growing macroeconomic vulnerabilities that have been exacerbated by the COVID-19 pandemic, the war in Ukraine and climate shocks, making the call for private sector investment even more urgent.

Djibouti private sector diagnostic has identified three priority areas where increased private sector investment can have the greatest impact on economic development and job creation in Djibouti: (i) leveraging Djibouti’s geostrategic location and infrastructure to take the lead as a regional hub for trade, telecom and finance; (ii) capitalizing on its natural resources to diversify the economy and maximize jobs creation; and (iii) boosting entrepreneurship through human capital development and linkages with the trade sector and military bases for inclusive growth.

To unlock these private investment opportunities and achieve Djibouti's Vision 2035, however, the diagnostic recommends policy shifts and targeted investments to address key cross-cutting constraints that hinder private sector investment in the country, notably in the areas of (i) governance; (ii) access to affordable electricity; (iii) access to affordable telecommunications; (iv) access to finance; (v) the business environment; and (vi) skills.