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- Executive Summary (French)
Djibouti’s strategic position at the entrance to the Red Sea, modern port infrastructure, and role as a regional connectivity hub have supported strong economic growth and substantial foreign investment. While GDP growth averaged 5.3 percent a year between 2016 and 2024, high external debt, unemployment and poverty, as well as heavy dependence on a narrow range of activities underscore the need for greater economic diversification.
The CPSD report finds that private investment is held back by several economy-wide constraints. Electricity is costly, serviced land is scarce outside free zones, and access to finance—particularly for micro, small, and medium enterprises and women-owned firms—remains limited. Skills mismatches, relatively high labor costs, and state-owned enterprise dominance in telecommunications, water, and electricity also weaken competition and raise the cost of doing business.
Against this backdrop, the new CPSD identifies three sub-sectors where private investment can be boosted by concrete policy actions: off-grid solar energy, data centers, and tourism. Off-grid solar could reduce businesses’ energy costs and strengthen resilience; data centers could capitalize on Djibouti’s strategic location and regional connectivity; and tourism could build on the country’s distinctive natural and cultural assets, as well as its potential as a hub of business travel.
Across all three sectors, the report's recommendations converge on a common set of priorities: strengthening regulatory institutions, reducing energy costs, improving access to finance, and investing in workforce development. Energy reform is identified as the most urgent priority, given its cascading effect on competitiveness across all sectors of the economy. With targeted policy action, Djibouti is well positioned to translate its geographic, political, and digital advantages into broad-based, inclusive economic growth.
